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2010-10-11T14:50:00.000-07:00

What Is Price/Earning (P/E) Ration?

2010-09-06T11:26:00.000-07:00

After finding the price of a particular stock, usually the next number everyone looks at is the P/E ratio.

P/E is the ratio of a company's share price to its per-share earnings.

A P/E ratio of 10 means that the company has 1 of annual, per-share earnings for every 10 in share price. (Earnings by definition are after all taxes and etc.)

A company's P/E ratio is computed by dividing the current market price of one share of a company's stock by that company's per-share earnings.

A company's per-share earnings are simply the company's after-tax profit divided by number of outstanding shares.

A company that earned 5M last year, with a million shares outstanding, had earnings per share of 5. If that company's stock currently sells for 50/share, it has a P/E of 10. At this price, investors are willing to pay 10 for every 1 of last year's earnings.

P/E is traditionally computed with trailing earnings (earnings from the past 12 months), which is called trailing P/E.

Sometimes is computed with leading earnings (earnings projected for the upcoming 12-month period), which is called a leading P/E.

For the most part, a high P/E means high projected earnings in the future. But actually the P/E ratio doesn't tell a whole lot, but it's useful to compare the P/E ratios of other companies in the same industry, or to the market in general, or against the company's own historical P/E ratios.

Some analysts will exclude one-time gains or losses from a quarterly earnings report when computing this figure, others will include it.

Adding to the confusion is the possibility of a late earnings report from a company; computation of a trailing P/E based on incomplete data is rather tricky. (It's misleading, but that doesn't stop the brokerage houses from reporting something.)

Even worse, some methods use so-called negative earnings (i.e., losses) to compute a negative P/E, while other methods define the P/E of a loss-making company to be zero.

Worst of all, it's usually next to impossible to discover the method used to generate a particular P/E figure, chart, or report.

Like other indicators, P/E is best viewed over time, looking for a trend. A company with a steadily increasing P/E is being viewed by the investors as becoming more speculative. And of course a company's P/E ratio changes every day as the stock price fluctuates.

The P/E ratio is commonly used as a tool for determining the value of a stock. A lot can be said about this little number, but in short, companies expected to grow and have higher earnings in the future should have a higher P/E than companies in decline.

For example, if a company has a lot of products in the pipeline, I wouldn't mind paying a large multiple of its current earnings to buy the stock. It will have a large P/E. I am expecting it to grow quickly. A rule of thumb is that a company's P/E ratio should be approximately equal to that company's growth rate.

PE is a much better comparison of the value of a stock than the price. A 10 stock with a PE of 40 is much more "expensive" than a 100 stock with a PE of 6.

You are paying more for the 10 stock's future earnings stream. The 10 stock is probably a small company with an exciting product with few competitors.

The 100 stock is probably pretty staid - maybe a buggy whip manufacturer.

It's difficult to say whether a particular P/E is high or low, but there are a number of factors you should consider:

First:

It's useful to look at the forward and historical earnings growth rate.

If a company has been growing at 10% per year over the past five years but has a P/E ratio of 75, then conventional wisdom would say that the shares are expensive.

Second:

It's important to consider the P/E ratio for the industry sector. Food products companies will probably have very different P/E ratios than high-tech ones.

Finally:

A stock could have a high trailing-year P/E ratio, but if the earnings rise, at the end of the year it will have a low P/E after the new earnings report is released.

Thus a stock with a low P/E ratio can accurately be said to be cheap only if the future-earnings P/E is low.

If the trailing P/E is low, investors may be running from the stock and driving its price down, which only makes the stock look cheap.

Exchange Traded Funds ( ETFs ) Or No Load Mutual Funds?

2010-09-02T14:42:00.000-07:00

If you are fed up with early redemption charges and ever increasing mutual fund management fees on top of bad-performing fund managers, read on.

There is a quiet revolution going on in the no-load mutual fund industry and you, the individual investor, may benefit from it greatly.

I am referring to Exchange Traded Funds (ETFs), which have been around for years, but have grown tremendously since their inception. There are currently over 100 choices with around $10 billion in assets.

In a nutshell, an ETF is a specific kind of no-load mutual fund that you might consider to be a basket of stocks. ETFs are diversified like mutual funds, only they trade like stocks. They are cheap to trade (as low as $8.00) and don't hit you with any short-term redemption fees. And they offer investing opportunities across the board.

ETFs track every index under the sun including the S&P 500, the Nasdaq 100, The Russell 2000 and many others.

Available through any stockbroker, they basically fall into one of the following three major categories:

1. Broad-Based U.S. Indexes

2. Sectors and

3. International

They have esoteric names such as iShares, StreetTracks, HOLDRs and SPYDRs. The difference is in the index they are tracking and the company marketing them. You will see big name companies offering them, like the American Stock Exchange, Barclay's Global Investors, Vanguard, and State Street Global Investors.

In addition to inexpensive trades and no short-term redemption fees, how else can ETFs save you money vs. no load mutual funds?

One way is on their annual management fees. That fee for ETFs is in the area of 0.45% vs. 1.5% on average for no load mutual funds. The fees charged by discount broker are so low they almost can be disregarded, usually less than 0.1% of the transaction.

So, if these ETFs are so great, why hasn't your broker or financial planner recommended them to you? Simple! Brokers, and those advisors working on commissions, don't make money on ETFs; no commissions up front or hidden on the back end. It's simply not in their interest to promote them!

With all the positives for the investor, there is one disadvantage, which may not be applicable to you unless you are a hot shot no load mutual fund picker.

It is that in any given economic environment really super performing mutual funds can outperform the indexes, but an ETF can never outperform the index it's tied to. You would need to look at your own investment record to know whether this is a downside for you.

A word of caution! Just because ETFs are cheap and easy to buy doesn't mean they will guarantee you a profit. You can lose money with them just as easily as you do with no-load mutual funds!

You still need to make sure you have a disciplined methodology in place to help you get into and out of the market. If you don't, you're gambling no matter what you invest in!

Forex Alert 02/23/10: BUY GBP on Euro/Gbp Pair

2010-02-22T22:41:00.000-08:00

BUY BRITISH POUNDS (GBP)

Investment case:

The phasing out of quantitative easing and hikes by the BoE (before the ECB) will lead to appreciation of sterling.

A gradual improvement of the economic situation and clarification of the political situation will reduce uncertainty related to sterling and the risk premium.

We expect a minor but gradual appreciation up until the summer of 2010. The great potential of sterling is some months ahead.

The strategy horizon is 3 months.

Potential/strategy:

We recommend buying sterling against the euro with a three-month target of 0.8400. We recommend placing stop loss about 0.8900, since a breach of this level will indicate a shift to a new level. If you would like to place your stop loss a bit closer, our recommendation is at about 0.8850. The spot reference is 0.8805.

Risk:

The UK falls back into recession and interest rates remain low for a longer period than expected.

If the financial crisis re-escalates, sterling is likely to have a higher risk premium due to its exposure to the financial sector in London.

A hung parliament may extend the period of uncertainty related to the consolidation of the finances.

The euro zone will get the situation with Greece (and the debt problems elsewhere) under control.

INVESTING ALERT: GLOBAL MARKET 02/17/2010 BUY - DELL

2010-02-17T04:30:00.000-08:00

BUY - DELL

We anticipate that Dell will on Thursday (18 February) release accounts that will show signs of improvement. Our positive view is mainly based on anticipations that Dell will in the 2010 calendar year benefit from a rising willingness to buy among corporate customers and a positive effect from Windows 7.

What is the reason behind this optimism?

The reason is simply that the tone of Dell's management has become more positive and that Dell has several times during the quarter (in connection with the release of the Q3 accounts and subsequently at the investor conference) indicated that it sees a rising willingness to buy among corporate customers. Although we believe that the improvement is still only moderate/fragile (a view that may turn out conservative), it is very positive for Dell that corporate customers’ willingness to buy is thawing out, as the company generates approx. 75% of its sales from this segment. To this should be added that the sale of PCs for private consumers was also very strong in Q4 (which was supported by the accounts from Microsoft and Intel) - a demand that was driven particularly by Windows 7.

We consider the development in the gross margin a joker in the quarterly accounts. The development depends very much of how aggressive Dell has wanted to defend or increase its global market share. Behind our estimates we still have a gross margin at 17.5% and we therefore anticipate that Dell has become slightly more aggressive. It should also be noted that we assume a tax rate at 28% against consensus at 26%. If we adjust our estimate to 26%, this will lift eps by 1 cent to usd 0.29 (against consensus at usd 0.26).

We maintain our buy recommendation for Dell with a price target of USD19

Generally, we expect that a combination of stronger willingness to buy among corporate customers and the fact that Windows 7 will mature will make Dell’s sale to corporate customers gradually increase. Hence, H2 2010 should also be better than H1 2010.

Fundamentally, Dell is a company that moves in the right direction. Before and during the global slowdown Dell has strengthened its competitive power. The operating costs have been adjusted significantly and due, among other things, to the acquisition of Perot Systems, a company that offers information technology and system integration, Dell is about to position itself as an attractive supplier of simple/small complex IT solutions. These solutions will help Dell increase its operating margin.

We expect that Dell will use its strong balance sheets (and cash flow) to pursue medium-sized acquisition targets (usd 1-4bn) and the primary focus is on acquisitions, which can relatively fast be scaled in its global organization (e.g. the Equal Logic acquisition in 2008 has more than tripled sales in less than two years).

Finally, we believe that the current price level underestimates Dell’s assets.The price target for Dell is usd 19, which is 30% above the closing level on 29 December 2009.

Happy Yielding!

Forex Alert: 02.15.2010 SELL EUR/USD

2010-02-15T04:15:00.000-08:00

Investment case:

We believe that USD will appreciate over the coming three months thanks to the relatively better prospects for the US economy.

The yield spread will narrow in favor of USD over the coming quarters.

The trend has changed, and USD is now in a technical uptrend.

The debt situation of Southern Europe will not be solved overnight.

The time horizon is three months.

Potential/strategy:

We recommend investors to sell EUR/USD spot trading. The target is initially 1.3200 or may you can exit at your own risk or return and we recommend stop loss to be placed at around 1.3850. The spot reference is 1.3623.

Risk:

For the short term there is a risk that USD may weaken, as the appreciation has been

relatively strong, and the market is stretched.

The debt problem has added a risk premium to EUR. If the subject of debt recedes, the

risk premium will be lowered, and EUR will appreciate.

FOREX ALERT 01/24/10: RECOMMENDATION – BUY EURO/USD

2010-01-24T04:27:00.000-08:00

Investment case:

• The beginning of 2010 will be characterized by USD funding as investors are embarking on a new accounting year with fresh books.

• The Fed’s quantitative easing keeps the USD value low; higher government debt does not result in increases in the US market rate as it should

• We expect, however, that the uncertainty relating to the other countries finances will abate over the coming month. If things calm down in this respect, the euro will be strengthened.

• We believe that the strong technical level at about 1.3980-1.4000, at which both the 55-month and the 12-month moving averages come in, will hold up initially.

• The strategy horizon is 1 month.

Potential/strategy:

We recommend that investors buy EUR/USD forward on Monday with a kick into forward (bought put. strike 1.4150 plus sold call, strike 1.4150, kick-in at 1.4800) – expiry in 1 month. The price is about USD 11,000 per EUR 1 million (indicative). Spot reference: 1.4139

If the problems relating to other countries like Greece develop further, any loss will be limed to the option premium. If EUR/USD reaches 1.4800 within one month, the loss will also be limited to the option premium. Target at 1.4600.

For forex spot trading we recommend BUY EURO/USD opening trading by monday, target price 1.4400-1.4600, time horizon 1 month. Spot reference: 1.4139

Risks:

• Renewed focus on internal imbalances in the euro zone and the downgrade of Greece’s credit rating put pressure on the euro

• The technical level does not hold up and we seriously begin to see a trend reversal for the dollar.

• The Fed surprisingly announces a positive economic outlook at the coming FOMC meeting.

FOREX ALERT 01/13/10: RECOMMENDATION – BUY GBP/USD

2010-01-12T22:23:00.000-08:00

Investment case:

• For the coming two quarters there are not many indications of a stronger dollar apart from an outbreak of risk aversion – rising equity prices will cause the US dollar to weaken.

• US interest rates will remain low and the dollar is still used as funding currency.

• The undervaluation of GBP is more than 25% and will be offset over time with a resultant sharp strengthening of sterling.

• We expect that the BoE will raise interest rates in Q3 and that the Fed will not raise until Q4. This will support sterling against the US dollar.

• The strategy horizon is 3 months.

Potential/strategy:

We recommend investors to BUY GBP/USD , the first target being 1.6800 and the next 1.7100. We recommend placing a stop loss at around 1.5700. The spot reference is 1.6150.

Risks:

• The trend in economic indicators for the UK in the coming 2-3 months: will the upswing continue? If not, we will probably not see a strengthening of sterling.

• The debt problems in the UK increase causing sterling to weaken.

• The Fed signals that it will raise interest rates earlier than we expect. This points towards appreciation of USD.

• A general shift in market sentiment towards risk aversion will be supportive of the US dollar and be negative for sterling.

FOREX ALERT 01/06/10: RECOMMENDATION – BUY USD/JPY

2010-01-06T05:40:00.000-08:00

Investment case:

When the other major central banks begin to make ready to tighten their monetary policies,and the yield spreads widen, we expect mounting pressure against the yen.

Moreover, it looks as if the deflation spectre is staying, and this means that Japanese interest-rate hikes will not be on the agenda until the second half of 2011, at the earliest.

The dollar will strengthen against JPY because the up turn will come earlier to the US, higher yield rises in the US.

The strategy horizon is one year.

Potential/strategy:

We recommend investors to buy a long (1 year) USD/JPY , . The spot reference
is 92.16, and the target price is 106.00.

Risks:

The diversification of reserves continues, and the issue of the US debt burden may hamper the dollar appreciation.

A surge of risk aversion may lead to a strengthening of JPY against USD and may have the effect that the yield spread is a less decisive factor.

The US economy slows down, which may cause postponement of interest-rate hikes and thus a weakening of USD.

Invest in a better future ... Not in the unsustainable companies we live for today.

2009-12-14T01:30:00.000-08:00

What does it really take to follow Benjamin Grahams investing advice? Who exemplifies this type of investing? Where can Benjamin Graham take me? These questions have been sifting through my head for the past week every time I glimpse my well used and sticky-noted copy of The Intelligent Investor. If you had to take a tour of my mind you would find innumerable questions like this all relating to business strategy, philosophy, the future of our world, the effects of globalization, business strategy, entrepreneurship, how psychology affects businessmen and woman etc. The purpose of this blog is to really just allow me a place to communicate my opinions in an easy way for people anywhere and everywhere to view. Anyway, that was my introduction to the thought that has been nagging at the fringes of my sanity for the past few days, what is investing?

The formal definition of investing is the process of laying out money or capital in an enterprise with the expectation of profit ... This is my opinion is far from correct. It deals with just one aspect of investing: the bottom line. It disregards the fundamental point of business in general. It also ignore many of the benefits of this age-old art. The world has moved away from investing and moved towards speculation. I see it everyday on the news, Bloomberg quotes stock prices every day, but never once have I ever seen any estimates or calculations for the underlying value of those shares. Bloomberg and related news disseminating companies will promote the widespread use of sudo-science we call Technical Analysis. The only time I see mentions of fundamental analysis in investing is when the name Warren Buffet comes up. Many people attribute his success to luck and simply knowing more than you or I. Well I for one believe that luck does not exist in reality and he doesn't know any more than we could had we the sheer determination that he has. The only thing we can attribute his success to is that he invests the hard way ...

Investing the hard way is a lost art. Spoken rarely about in the common circles of brokers,fund managers, traders and "stock market guru's". The reason why this so-called-secret is never discussed in these circles is because nobody has the effort to pull it off. So instead these people will fill your head with illogical verbal diarrhea about how the share prices on any given stock exchange represent to the fullest extent, everything about that share. I, however, could not disagree more. Share prices change every couple of minutes, are we truly willing to say that the value of a company can change every fifteen minutes? Every time a secretary send an email? Or every time the janitor sweeps the hall? I for one think that this is the most absurd argument in investing history. Well enough about the easy and the wrong way to invest: here's the hard way:

Before you buy a share you must know that that share is not just a piece of paper. It represents a partial ownership in a company. Firstly: never buy a share in a company you would not want to own!
You must go about calculating the intrinsic value of the company you wish to invest in. This may sound easy and I am sure the accountants would be screaming asset value! Well, no not exactly. The value of a company (the true value) is not just the current assets, but also the future assets. The value of the company should include calculations on growth and cash-flow projections. I have compiled a list of factors that must be taken into careful consideration before investing in a share:

The book-value of the company
The value of the brand
The future value of the company under the brand
The future growth of the economy
The future values for inflation/ deflation
The future growth of the industry wherein the company is situated
The mantra in the company
The people running the company
The future competitiveness of the company in the global/ local markets
And many more micro-economic factors relating to the particular business

Now you are thinking how on earth do you work out those things? And well I have some bad news for anybody reading this post, there is no set and sure way to calculate anything, let alone predict the future. Now that is the bad news but here is the good news: If you let go of your preconceived notions that investing is all about complex formulae, stock projections and insider information you will see that a share is a piece of a business. And a businesses success is built primarily on its ability to sell its product, communicate its message and just generally, grow. Now, you may still be thinking OMG I don't even know how to do that, but had I taken you back into the past and shown you Google even a five year old would be able to tell you that it would be a success, WHY? Well because it fulfills a very important human need. Look to history and you will find that the best companies in the history of this world have all done one thing: they have done something that made people's lives more comfortable and better overall ...

Now I will do something very out of character and I will actually say here what companies from my research will be the best performing in the future: companies that appease the moral consciousness of people. In other words, green companies. Companies that will make you and I feel better about jumping into our car every morning. Companies that can guarantee that you are not profiting at the expense of our planet. Companies that make you feel less guilty for living as you do. Green companies are the future of the world and it is just a matter of time before an affordable, mass produced car company comes along that fulfills this 21st century need. And when that company does come, after some further investigation and analysis, I will be there, money in hand investing in the future.

ALL ABOUT RENEWABLE ENERGY RESOURCES

2009-12-07T03:01:00.001-08:00

What can you do about high gas and energy prices?

That’s what another topics in this blog site is about, and more.

I saw an ever increasing emphasis on energy management as fuel and energy prices gradually but continually increasing.

Today energy prices are everybody's concern and its could really affect our Investment and LIFE PLANNING.

As you browse our blog site you’ll see simple ways to start saving both gas and money today. You won't see a lot of technical jargon. But you will see how you can help win the fight to end high energy prices.

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Click the links below to see those all-important details.

A Plan to Win

A simple 5-step action plan to win the fight against high energy prices.

FINDING INVESTMENT MONEY

2009-12-07T02:45:00.000-08:00

HOW TO FIND ENERGY INVESTMENT MONEY

PROBLEM – A lot of folks are struggling to just meet expenses.

If that describes your situation, you may wonder just where you are supposed to get all that extra investment money.

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SOLUTION – The money comes from within your budget. Here’s how.

Go back to the Energy Action Plan . The links shown on Action Step 1 and Action Step 2 will help you start saving money that would otherwise be wasted.

Just figure how much you spent on fuel before you started using the energy and money saving methods we detailed.

Then keep track of how much you save each month now that you are using Action Step 1 and Action Step 2 to reduce your energy expenses.

Once you know how much you save each month (here’s the fun part), invest only half of it (but no more than the limits discussed on the Energy Investing topic), and keep the other half as a reward for your efforts.

And that’s just the beginning of your money saving ventures.

The tips on our Get Car Smart pages can help you save hundreds on car repair expenses. And the finance info on the that pages can help you save thousands, yes thousands on every car you buy.

Add all of those money saving strategies together and you’ll find that you can keep half to reward yourself, and still have a substantial pile of financial ammunition to use in the war against high energy prices.

Return To Energy War Plan

TAKE ACTION

2009-12-07T02:35:00.000-08:00

ENERGY ACTION PLAN

Here’s an outline of the five-step energy action plan.

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TAKE ACTION

1. Spend less on energy
2. Use less energy
3. Invest in technologies and resources that compete with conventional oil.
4. Get others to join the fight.
5. Go back to Action Step 1 and repeat.

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A LOOK AT EACH ACTION STEP

Note: Every war (or game if you prefer) involves a combination of defensive and offensive actions. To win we have to use both defense and offense.

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ACTION STEP 1 - SPEND LESS ON ENERGY – Management (A Defensive measure.)

You can spend less on energy without conserving.

But if you practice good management AND good conservation, you’ll save even more.

So, do both, and keep even more of your hard-earned money.

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ACTION STEP 2 - USE LESS ENERGY – Conservation (A Defensive measure.)

A lot of what we hear about energy conservation sounds too much like finger pointing. It sounds like we are being told that we don’t drive small enough cars, or that we should give up our cars altogether and get bicycles.

We aren’t going to suggest anything like that here.

We all have our reasons for our personal transportation choices. If someone wants to trade their stuffs like car, that’s fine. But they shouldn’t think badly about the rest of us for not joining the lines at the bike shop and bus station.

We didn’t design the industrialized nations we live in. But, like all people, we do what we can to adapt to life in our home country. To be honest, most of us wouldn’t trade our way of life for any of the alternatives.

With that understanding, we offer a number of ways to conserve that easily fit into the lifestyle most of us enjoy. Using the techniques on our Gas Saving Driving and Gas Saving Car Care will save energy, maybe a lot of it, and help keep your hard earned money in your pocket.

It is worth noting that conservation is actually both a defensive and an offensive measure. In addition to saving your money, it reduces demand on energy supplies.

Conservation is the start of an offensive against high energy prices. But it is just a start.

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ACTION STEP 3 - INVEST - Invest in technologies and resources that compete with conventional oil. (An Offensive.)

In the first two Action Steps you defended your energy and money supplies.

Now it’s time to start a real energy offensive.

Competition is the heart and soul of free enterprise. Consumers almost universally demand three things – faster, better, cheaper. Competition moves that process forward in every industry on the planet, to the benefit of consumers.

More competition means better products with cheaper prices. And competition greatly speeds up the innovation and marketing process.

Conventional oil needs competition.

Your investments help provide that competition.

But investing needs to be done in a prudent, systematic way so your money does the most work with the least amount of risk. Our Energy Investing strategy (w/c we discuss in the future) were built as a guide to help get you pointed in the right investing direction.

[Note: I am not a professional investment counselor. I have had a reasonable amount of success with my own business/investments, though. I wrote the Energy Investing pages to share lessons I have learned, and resources that have served me well.]

Another way to invest in the fight against high oil prices is to buy a car that reduces or eliminates the need for gasoline. Of course, we’re talking about the next time you’re actually in the market for a car.

Before you buy that new car take a look at our Alternative Engine Options page. You’ll be amazed at the alternatives, and these aren’t Star Wars technologies. They are practical innovations, and they are here now.

ACTION STEP 4 - TALK TO OTHERS - Get others to join the fight. (A major Offensive against high energy prices.)

This is an absolutely vital part of the plan.

It took a group effort to push energy prices to where they are today. It will take a group effort to bring them back down.

As you work the first three steps and start getting excited about the results, share that information with others. If you’re tracking your conservation efforts and discover that you can painlessly save $xxx a month or more, share that. When you hear about a new technology that reduces energy demand, share that.

When you share any kind of energy related information try to remember to bring up the 5-Step Plan. If you are sincerely excited about what you are accomplishing as you fight for energy security, then you will find the plan easy to talk about.

Excitement is contagious. The more you learn about fighting high energy prices, the more you will have to be excited about; and that’s all the salesmanship you’ll ever need.

Spreading the word is NOT about selling.

Spreading the word IS about sharing information that excites you.

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ACTION STEP 5 - REPEAT – (A Battle Plan)

Go back to Action Step 1 and repeat the process.

That doesn’t mean that you have to always be looking for new ways to conserve and save. It does mean that the process needs to be repeated. Week after week each of us needs to continue the effort.

Victory over high energy prices and energy insecurity requires a sustained effort. We didn’t get here overnight and we won’t win the war in a week or two.

It is far more effective for each of us to do all of the steps a little, than to do just one - even if we do it a lot.

Do a little, but do something.

If we do nothing about energy except pay and gripe, then prices and supplies are bound to get worse. Let’s face it, paying and complaining isn’t much of a battle plan.

If nobody does anything we could be looking at an energy war fought not with management and money, but with bombs and blood. And a lot of people suspect that we’re already doing just that.

Return To Energy War Plan

Leave Energy Action and Return ALL ABOUT RENEWABLE ENERGY

SOLUTIONS TO ENERGY PROBLEMS ARE HERE NOW

2009-12-07T02:30:00.000-08:00

SOLUTIONS TO ENERGY PROBLEMS ARE HERE NOW

Since the problem of high energy prices is caused by increased demand and tight supplies, the way to lower prices is, obviously, to reduce demand and increase supplies.

Exactly how we go about that is what this site is about. You will be happy to know that we have a number of practical solutions available.

We have a growing array of technologies hitting the market that either greatly reduce the need for oil-based energy, or completely eliminate it. More information on these exciting solutions can be found at Before You Invest and Alternative Engine Options .

When you look at our Energy Resources pages you’ll see that we also have a host of alternatives to compete against conventional oil supplies. They include vast alternative oil resources that are just now being brought to life, equally vast alternative natural gas resources, and over a dozen more energy resources to make electricity.

Once you’ve had a peek at some of the energy solutions, it’s time to move on to the Energy Action Plan .

Return To Energy War Plan

Leave Solutions To Energy Problems and Return to ALL ABOUT RENEWABLE ENERGY

WHY ARE ENERGY PRICES SO HIGH?

2009-12-07T02:17:00.000-08:00

WHY ARE ENERGY PRICES SO HIGH?

Our energy situation in anywhere is a real mess.

We are faced with absurdly high energy prices and supplies that we fear could be disrupted at any time. In fact, high energy prices and fear of energy supply disruptions often go hand in hand.

Why do we have these problems?

THE THEORIES

Volumes have been written about our energy problems, the global oil industry, attempts to control price and supplies, and more. Most paint a bleak picture.

[Note: Conventional oil is the main source of financial pain and concern in the energy sector today. So, for now, we will focus on strategies that compete mainly against conventional oil.]

A number of authors suggest that tight energy supplies and high prices are a result of filthy-rich oil companies hoarding supplies and engaging in global price fixing. Others say that the situation is caused by greedy oil cartels like OPEC conspiring to do the same. Many suggest that it’s a combination of those and similar factors.

The main problem with oil conspiracies is that they just don’t work very well when supplies are plentiful. That’s not to say that nobody tries. And when supplies are already tight the impact can be, well, much like we face today.

The OPEC information page at Wikipedia includes a telling example of the power of fundamental supply and demand over energy supplies and prices.

Plentiful supplies and low demand mean cheap prices.

Tight supplies and high demand mean high prices.

The end result of exceptionally high oil prices is always increased exploration and development.

Increased exploration and development increase supplies.

Increased supplies lower prices.

Oil producers, like all business concerns, know that excessively high prices attract investors and ultimately result in tough competition and lower prices.

So, why would oil producers allow a situation to exist that would ultimately cost them billions, even though they are currently reaping a huge harvest?

The answer is that they wouldn’t allow it, if they could prevent it.

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THE PROBLEM

I’m going to suggest that our energy problems are caused by something other than attempts to control supplies and prices. I won’t argue with the notion that a number of oil interests are moving to influence the energy market. But the results of those manipulative attempts are limited.

Any conspiracy that attempts to control energy prices is up against a fundamental law of economics - The Law of Supply and Demand.

I’m going to suggest, even insist, that THE Problem with energy today is an economics problem.

THE problem is a combination of high and increasing global demand for energy, and energy supplies that are getting harder to find. Not all energy supplies, mind you, but conventional energy supplies, especially oil.

Conventional energy supplies are the ones we’ve been using for the last century. They include resources like coal from coal mines, natural gas (that’s often found in oil wells), and oil from oil wells.

China and India, among others, are currently enjoying explosive economic growth. Virtually every nation on Earth wants the same thing. That economic growth requires increased energy supplies.

Meanwhile, the easy to find, easy to harvest conventional energy supplies are, by most accounts, fully developed. Conventional energy exploration and development today is a high-risk, multi-Billion dollar gambling operation.

The end result of all of this activity is high energy prices with economic pressures threatening to push them still higher.

But.

We do have energy resources that can compete head-to-head with conventional energy.

Energy exploration today is much more than drilling more oil wells. It includes research into a host of alternative energy resources and technologies that can reduce, or even eliminate our need for conventional oil.

We’ll discuss those at Solutions to Energy Problems .

Energy - A Plan to Win in this War

2009-12-07T01:59:00.000-08:00

ENERGY WAR – A PLAN TO WIN

The plan to win the energy war takes only a minute to understand. Understanding the details will take a bit longer. And understanding the details is the key to success.

Here is a brief outline.

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THE PLAN

IDENTIFY THE PROBLEMS
1. High energy prices
2. Fear of energy supply disruptions.
3. Limited variety of available energy (oil, gas, coal)

FIND SOLUTIONS TO THE PROBLEMS
1. Reduce demand
2. Increase energy supplies
3. Increase the variety of usable energies (alternatives)

TAKE ACTION
1. Spend less on energy.
2. Use less energy.
3. Invest the money you save in technologies and resources that compete with conventional energy.
4. Get others to join the fight.
5. Go back to Action Step 1 and repeat.

That’s it.

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Simple, some might say simplistic. But, if each of us takes all 5 of the Action Steps outlined above, the plan will work, in fact, it can’t help but work.

The Action Steps work together, one supporting the other.

That doesn’t mean you need to trade your any stuffs. And we darn sure aren’t going to suggest that you invest your life savings in alternative energy schemes.

So, What are we suggesting?

Let’s take a closer look at the plan and see.

_________________________________________________________________

IDENTIFY THE PROBLEMS - Answering why we have our current energy problems is the first step to finding solutions that actually work.

FIND SOLUTIONS TO THE PROBLEMS – The notion of reducing demand and increasing supplies to ease our energy woes isn’t new. But we do it by offering practical, user friendly solutions.

TAKE ACTION - Important details that help you launch a real war against high energy prices.

FINDING INVESTMENT MONEY - It’s closer than you might think, and it’s almost like finding it at your feet.

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Whats next?

Start browsing the rest of the site to find hundreds of helpful details. Think of each detail as an extra round of ammunition in your war against high energy prices.

Congratulations, you now have a battle plan to win the war against high energy prices.

Ready to fight back?

NOTE: To be continued!

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Leave Energy War Plan and Return ALL ABOUT RENEWABLE ENERGY

ALL ABOUT RENEWABLE ENERGY RESOURCES

2009-12-07T01:39:00.000-08:00

What can you do about high gas and energy prices?

That’s what another topics in this blog site is about, and more.

I saw an ever increasing emphasis on energy management as fuel and energy prices gradually but continually increasing.

Today energy prices are everybody's concern and its could really affect our Investment and LIFE PLANNING.

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Click the links below to see those all-important details.

A Plan to Win

A simple 5-step action plan to win the fight against high energy prices.

FOREX MARKET ALERT: RECOMMENDATION – BUY GBP/JPY

2009-12-02T02:15:00.000-08:00

Investment case:

It seems that UK retail sales have bottomed out. Consumers are beginning to look ahead, and the housing market seems to have stabilized. Overall, this should support sterling.

Interest-rate hikes in the UK in Q3 2010 will support sterling.

The prospect of deflation in Japan until some time in 2011 means that any tightening of the monetary policy in the form of interest-rate hikes is a good long way off.

We expects equity prices to rise over the coming months, and this should support the sale of JPY.

Technically, GBP/JPY is at the bottom of the trend, and our preferred technical indicators have buy signals for GBP/JPY.

The strategy is expected to last for up to three months.

Potential/strategy:

We recommend investors to buy GBP/JPY forward outright, the first target being 150, the next
152. Stop loss should be put at around 139.50. The spot reference is 145.46.

Risks:

The BoE is still considering whether to lower its rate on the banks’ reserves, thereby pushing down rates further to force the banks increase their lending. This may put pressure on GBP.

Given its sharp fluctuations, sterling has been difficult to predict these past few weeks. There is no indication that the situation will change towards the turn of the year, and this may result in fair fluctuations of the position.

Risk of renewed risk aversion supports JPY slightly.

What's Your Investing Style?

2009-11-29T18:00:00.000-08:00

"To Thine Own Self Be True!" Shakespeare Hamlet/Polonius

This old advice rings true for modern-day investors!

Your temperament, your inner spirits should guide you in making investments. If you are a conservative, risk-averse person, then don't kid yourself. Face up to it, and invest accordingly, which means conservatively. No one can put a price tag on your ability to sleep soundly at night!

On the other hand, if you're more venturesome, more willing to accept higher risk in return for the potential of higher reward, you should be able to act more aggressively in the market.

Most people invest for different reasons at different times and use various methods. Whatever approach, or approaches, you take, the most important thing is to know why you bought a particular stock.

If you bought a stock on the recommendation of your neighbor or your broker, be happy about it and recognize that this is why you bought it!

Then you will be more likely to avoid the "investor imperative," namely the following behavior:

If your stock rises, claim it as your ability ...

If it falls, pass on the blame!

Friend Investor:

Your friend phones. He has the perfect story on a great stock but you will have to act quickly! If you are likely to buy in this situation, then you are a friend investor. Friend investors rely on the advice of other people to make their decisions.

Technical Investor:

Moving averages, candlestick patterns are the sort of things the technical investor deals with. Technical investors were once called "chartists" because their central activity was making and studying charts of stock prices.

Nowadays this is usually done on a computer where advanced mathematics combines with grunt power to unlock past patterns and correlations. The hope is that they will carry into the future.

Economist Investor:

This type of investor bases his decisions on forecasts of economic parameters. Typical statements are unemployment will decrease, interest rates will climb etc.

Random Walk Investor:

I have no idea whether stock XYZ will go up or down, but it has a high beta! Since I don't mind the risk, I'll buy it since I will, on the average, be compensated for this risk.

The current price of a stock is what you should buy, or sell, it for. This is the fair price and no amount of analysis will enable you to do any better.

Informal Information Investor:

This approach to investing consists of piecing together information on companies obtained informally through wide-ranging conversations, interviews, press-reports and, simply, gossip.

Value Investor:

This investor attempts to value a stock independently of its current market price. This independent value has many names such as intrinsic, investment, reasonable, fair, and appraised value.

An intrinsic value would be the value which is justified by the facts: assets, earnings, dividends, definite prospects, including the factor of management. Value investing is the method of deciding on individual investments on the basis of their intrinsic value as contrasted with their market price.

Growth Investor:

They are looking for stocks with high price to book value or a high price-earnings ratio. Growth is always a component in the calculation of value, constituting a variable of high importance and positive impact.

Conscious Investor:

This type of investor overlaps the types just mentioned. Increasingly investors are respecting their own beliefs and values when making investment decisions. Many others are following their own paths to clarify their investment values and act on them.

Starting Early to Invest

2009-11-21T01:56:00.000-08:00

Investing and Starting Early

"The greatest loss of time is delay and expectation, which depend upon the future. We let go the present, which we have in our power, and look forward to that which depends upon chance, and so relinquish a certainty for an uncertainty." Lucius Annaeus Seneca (5BC - 65AD)

There is never a bad time to get started investing.

And there is never a really good excuse for not starting!

I don't care if you think the market today, or tomorrow, or next year is too high, or is going to drop even lower!

I don't care if you think you don't know enough about investing.

I don't care if you think you don't have enough money ...

Start investing as soon as possible!

It is not the amount of money invested that is really important, but when an investor gets started with a long term plan is critical.

Time is the real best friend to an investor!

The biggest success factor influencing your portfolio is how well you harness the power of time and the rate of return you earn on your investments.

The beauty of time is that it doesn't depend on how smart you are or how much money you have! Time is the great equalizer for investors. Indeed, time is available to everyone.

If time is the most influential factor on your portfolio's performance, it follows that the most important thing you can do is to get started in an investment program as soon as possible.

When Is the Right Time to Start Investing?

I Believe that the Best Time Is Right Now!

And this holds true whether you are 20 years old, 60 years old or somewhere in between.

Starting early gives you two major advantages.

First:

The longer you have to invest, the more aggressive you can be when selecting investments, knowing you will have the time to ride out any possible short-term fluctuations.

Second:

A longer investment time frame enables you to capitalize on the true long-term value possibilities of your selected investments.

Mutual Funds

2009-11-15T20:51:00.000-08:00

Benefits of Mutual Funds

Professional Investment Management:

By pooling the funds of thousands of investors, mutual funds provide full-time and high-level professional management that few individual investors can afford to obtain independently.

Such management is vital to achieving results in today's complex markets. Your fund managers' interests are tied to yours, because their compensation is based not on sales commissions, but on how well the fund performs.

These managers have instantaneous access to crucial market information and are able to execute trades on the largest and most cost-effective scale.

In short, managing investments is a full-time job for professionals.

Diversification:

Mutual funds invest in a broad range of securities. This limits investment risk by reducing the effect of a possible decline in the value of any one security.

Mutual fund shareowners can benefit from diversification techniques usually available only to investors wealthy enough to buy significant positions in a wide variety of securities.

Low Cost:

If you tried to create your own diversified portfolio of i.e. 50 stocks, you'd need a very large amount of money and you'd pay thousands more in commissions to assemble your portfolio.

A mutual fund lets you participate in a diversified portfolio for as little as $500 or Peso Equivalent and sometimes less.

Convenience and Flexibility:

You own just one security rather than many, yet enjoy the benefits of a diversified portfolio and a wide range of services.

Fund managers decide what securities to trade, clip the bond coupons, collect the interest payments and see that your dividends on portfolio securities are received and your rights exercised.

It's easy to purchase and redeem mutual fund shares, either directly online or with a phone call.

Total Liquidity and Easy Withdrawal:

You can easily redeem your shares anytime you need cash and the proceeds are usually available within a day or two.

Life Cycle Planning:

You can link your investment plans to future individual and family needs -- and make changes as your life cycles change.

You can invest in growth funds for future college tuition needs, then move to income funds for retirement, and adjust your investments as your needs change throughout your life.

Market Cycle Planning:

For investors who understand how to actively manage their portfolio, mutual fund investments can be moved as market conditions change.

You can place your funds in equities when the market is on the upswing and move into money market funds on the downswing or take any number of steps to ensure that your investments are meeting your needs in changing market climates.

A word of caution: since it is impossible to predict what the market will do at any point in time, staying on course with a long-term, diversified investment view is recommended for most investors.

Investor Information:

Shareholders receive regular reports from the funds, including details of transactions on a year-to-date basis. The current net asset value of your shares (the price at which you may purchase or redeem them) appears in the mutual fund price listings of daily newspapers.

Your Investment Profile

2009-11-06T20:46:00.000-08:00

Your Investment Profile and
the Risk Tolerance Quiz

To get an idea of your investment profile, start by calculating your investment horizon.

Investment Horizon:

Investment horizon is the period of time, in years, that you wish to remain invested. Investment horizon may be measured as the point in time when you begin taking distributions, or it may be measured as the point in time when you expect to complete taking distributions.

This is the number of years that you can invest. Your investment horizon depends on your financial goal.

Financial Goal:

A financial goal is a goal that involves saving and investing to reach a specific amount by a specific date.

For example, a financial goal may be to save 20,000 for a college education fund for a child in 14 years, or it may be to save 600,000 for a retirement fund in 20 years.

You can achieve your financial goals through a combination of saving more, saving longer or earning a higher rate of return.

Your goal may be to save for college, retirement, or a down payment on a home. Each goal has its own investment horizon.

For example, saving for retirement at age 65 when you're 20 gives you an investment horizon of 45 years. The longer the investment horizon, the longer you can save and benefit from compounding.

Next, estimate your risk tolerance.

Your risk tolerance is your willingness to accept some volatility in the rate of return of your investments in exchange for a chance to earn a higher return.

If you expect a higher rate of return, you should be willing to accept a higher degree of risk. This is called the risk-return trade-off.

Risk-Return Trade-off:

A basic investing principle that says the higher the potential rate of return, the higher the investment risk. Academic and industry studies support this relationship.

For example, stocks historically offer a higher rate of return than bonds. They also have a higher degree of investment risk. Investment risk is measured by the volatility of investment returns.

To get an idea of your risk tolerance, take a few minutes to complete the following risk tolerance quiz:

Question:	1 Point	2 Points	3 Points	4 Points
1. I plan on using the money I am investing:	Within 6 months.	Within the next 3 years.	Between 3 and 6 years.	No sooner than 7 years from now.
2. My investments make up this share of assets (excluding home):	More than 75%.	50% or more but less than 75%.	25% or more but less than 50%.	Less than 25%.
3. I expect my future income to:	Decrease	Remain the same or grow slowly.	Grow faster than the rate of inflation.	Grow quickly.
4. I have emergency savings:	No	--	Yes, but less than I'd like to have.	Yes
5. I would risk this share in exchange for the same probability of doubling my money:	Zero	50%.	25%.	10%.
6. I have invested in stocks and stock mutual funds:	--	Yes, but I was uneasy about it.	No, but I look forward to it.	Yes, and I was comfortable with it.
7. My most important investment goal is to:	Preserve my original investment.	Receive some growth and provide income.	Grow faster than inflation but still provide some income.	Grow as fast as possible. Income is not important today.

To get your own profile add the number of points for all seven questions:

Continue tp the Next Page to See Your Investment Profile

Investment Profile

2009-11-06T20:44:00.000-08:00

Your Investment Profile and
the Risk Tolerance Quiz
Part 2

Add one point if you choose the first answer, two if you choose the second answer, three for the third and four points for the fourth question.

If you score between 25 and 28 points, consider yourself an aggressive investor.

Aggressive Investor:

An aggressive investor is an investor who is willing to accept a higher degree of investment risk in exchange for a chance to earn a higher rate of return.

Investment risk is the volatility of investment returns. A basic investing principle states that a higher degree of investment risk is required to earn a potential higher rate of return.

If you score between 20 and 24 points, your risk tolerance is above average.

If you score between 15 and 19 points, consider yourself a moderate investor.

Moderate Investor:

An investor who is willing to accept some investment risk in exchange for a chance to earn a higher rate of return. Investment risk is the volatility of investment returns.

A basic investing principle states that a higher degree of investment risk is required to earn a potential higher rate of return. On the risk-tolerance scale, a moderate investor is in between an aggressive and conservative investor.

This means you are willing to accept some risk in exchange for a potential higher rate of return.

If you score fewer than 15 points, consider yourself a conservative investor.

Conservative Investor:

An investor who is unwilling to accept a higher degree of investment risk in exchange for a chance to earn a higher rate of return. Investment risk is the volatility of investment returns.

A basic investing principle states that a higher degree of investment risk is required to earn a potential higher rate of return.

If you have fewer than 10 points, you may consider yourself a very conservative investor.

This is only an example of a short quiz used by financial institutions to help you estimate your risk tolerance.

For specific investment advice, you should always consult your financial adviser.

Go Back to the Previous Page

Direction of Stocks

2009-11-06T20:42:00.000-08:00

Direction of Stocks:
True Top or True Bottom?

Knowing when to "play" the market aggressively and when to step back and reduce one's exposure by playing more cautiously is the hallmark of a real "Master!"

Many would-be successful traders fail to realize that a large part of their overall profitability is determined by their ability to determine when the environment is favorable and when it is not.

And when it is not, you had better have an alternative approach to the markets or ...

You will be eaten up alive! Plain and simple!

There are only two ways to make money in trading or investing!

One: The stock is moving in a certain direction and you bet it will continue to move in that direction and,

Two: The stock is moving in a certain direction and you bet it will change and move in the opposite direction.

That's it ...

It's all a matter of direction ...

Up or Down!

We do know that it's harder to change directions than go with the flow. So why would you bet a stock is going to change directions? Sure it does happen and it happens often. But unless you know something everyone else doesn't know why bet on it?

You have a fifty fifty chance of picking the correct direction knowing nothing. What gives you the edge is knowing what direction the stock is currently moving in.

Now no stock will move straight up or straight down. They will all change directions for a point or maybe even two or more. So you have to determine which changes are false and which are real changes.

Regardless of the trading you do or the system you use, if you can determine the direction of movement and spot false from real changes you can become rich!

So that means all you have to be able to do is tell the difference between false change of direction and real change of direction. If you can do that you have it made!

This is called finding the "True Top" or "True Bottom" of a stock!

Learning from Your Mistakes

2009-11-06T20:39:00.001-08:00

Learning from Your Mistakes

"Time ripens all things; no man is born wise!"
Miguel de Cervantes (1547 - 1616)

Simon Gervais and Terrance Odean in their 1997 "Learning To Be Overconfident" market model survey, they referred to the fact that novice investors do not know why they are successful until enough time passes so that they can gauge how they are doing by the increases or decreases of their portfolios.

Investors take too much credit for their successes and less responsibility for their losses.

Therefore, an overconfident investor tends to become more risky than his ability could ever actually sustain.

Moreover an overconfident person trades too aggressively, therefore increasing trading volume and market volatility.

Overconfidence does not make investors wealthier, but the process of becoming wealthy can make them overconfident!

Having success with such overconfidence is invariably due to luck, not skill, or at least limited skill. And should investors use their overconfidence and the market changes, they can then put themselves into an untenable financial situation when the risky investments possibly fail!

Novice investors are consistently overconfident in their ability to outperform the market, however, most fail to do so!

People usually trade for both cognitive and emotional reasons. They trade because they think they have information when they have nothing but noise, and they trade because trading can bring the joy of pride.

Trading brings pride when decisions turn out well, but it brings regret when decisions do not turn out well.

People usually place different weights on gains and losses and on different ranges of probability. Individuals are much more distressed by prospective losses than they are happy by equivalent gains.

People are twice as likely to feel the pain of a loss than the joy of a gain, and are willing to take more risks to avoid losses than to realize gains. Faced with sure gain, most investors are risk-averse, but faced with sure loss, investors become risk-takers.

Looking at your winning investment decisions objectively is easy to do. Yet, most people don't ever take the time to analyze their mistakes. Post-analysis is one of the best learning tools you have at your disposal.

Don't be afraid to look at your mistakes.

The only real mistake is to continue to be overconfident and make the same mistakes!

I definately recommend you always do a detailed post-analysis of your trades. Note where you made money, and where you lost money. Separate your good, money making decisions from your bad ones.

Go back and look at your good decisions and see what you did correctly. Were you buying stocks at the right time? Was the general market on an upswing?

Then go back and look at your bad decisions. Were you buying stocks with poor earnings? Were those stocks trading at or near new price highs when you purchased them or were you buying them on the way down?

Did you buy the stock right, but just sold it badly? Was the general market in a correction phase?

When reviewing your loosing decisions, look for patterns or common mistakes you may have been unaware you were making.

Make a note of them by writing down a new rule for yourself to follow like, "I will not do X in the future" or "I will do Y in the future."

Organizing these rules will help you get rid of bad habits you may have acquired, and it will help you accentuate the things you are doing correctly.

Remember, admitting and learning from your past mistakes is the best way to become a smarter, better, and more successful investor!

Investment Cost Averaging

2009-11-06T20:32:00.000-08:00

Investing,Dollar Cost Averaging and
Value Averaging

"It does not matter how slowly you go ...
So long as you do not stop!"
Confucius (551 - 479 BC)

You start investing, and find yourself buying in at the top. Then, prices stumble and you sell ...

Precisely at the bottom!

Like the pendulum that keeps on swinging back and forth, investor sentiments tend to alternate between periods of enthusiasm and despair.

Unfortunately, many investors are guided by their emotions and allow the mood of the market to dominate their investment decisions.

No one can consistently predict the tops and bottoms of the stock market.

History has proven that correctly predicting the timing and extent of stock market trends is impossible.

This is because world developments and the psychological reactions of people are completely unpredictable. It's no surprise that a foolproof winning formula remains elusive.

One effective strategy for overcoming the emotional hazards of investing is the cost averaging approach that imposes a discipline that relieves the investor of grappling with uncertainty and volatility in the securities markets.

Cost averaging is a systematic investment plan involving buying equal amounts of an investment at set intervals -- monthly, quarterly, and so on.

Cost averaging is most prevalently used by investors who don't have lump sums to invest, but would like to accumulate an investment portfolio over time.

Strategically, cost averaging forces investors to be in the market when prices are depressed, but it also forces you to buy when prices are high.

Cost averaging does not assure a profit or protect against loss in declining markets. Because such a strategy involves periodic investment, you should consider your financial ability and willingness to continue purchases through periods of low price levels.

For investors with lump sums to invest, but who are afraid of entering the market prior to a correction, cost averaging will help to ease them into the market.

Value Averaging

Value averaging (see Value Investing) also capitalizes on the cost averaging systematic approach. It works in much the same way as cost averaging, but with value averaging, you decide on a target amount to invest, then adjust your monthly contributions to maintain that target.

Like cost averaging, value averaging can help lower your average cost per share. But value averaging goes one step further.

Because you end up investing more money when prices are low and fewer when prices are high, you have the opportunity to reduce your average cost per share even further.

It's a strategy that doesn't try to outguess the market's fluctuation, but rather seeks to make those fluctuations work for you!

Subprime Loans Crisis

2009-11-06T20:26:00.000-08:00

The Subprime Loans Crisis

Subprime loans, also called "B" loans or "second chance loans" are loans originated to borrowers who do not qualify for market interest rates because of problems in their credit history.

Borrowers who have a credit score below 620 (on a scale from 380 to 850) are generally defined as sub prime borrowers.

Subprime loans are generally considered risky for both the borrower and the lender.

It's risky for the lender because borrowers usually have lower incomes and a poor record for paying debt, which increases their default probability.

It is also extremely risky for borrowers.

To offset the risk of defaults, lenders will charge high rates of interest to offset the risk. The high interest rates however are strenuous for borrowers which further increases their likelihood of default.

Subprime loans were created with the realization that a lot of money could be made to borrowers with poor credit who could not get conventional loans.

Conventional lenders would not take the risk to lend to people with credit scores below the firm threshold. This opened many opportunities for subprime lenders to lend to people with below acceptable credit scores.

21% of mortgage applications between 2004 and 2006 were subprime compared to 9% between 1996 and 2004.

Subprime mortgages reached a record of US$ 805 billion in 2005. In 2006 they totaled approximately US$ 600 billion.

There are various different types of subprime mortgages including "interest only mortgages," which allow borrowers to only pay interest for a period of time, "pick a payment," which gives the borrower the option on how to repay the loan and "initial fixed rate mortgages," which convert to variable rate loans.

The subrime story begins with borrowers who have a poor credit history looking to buy a house and are prepared to pay a mortgage rate typically 2% higher than rates charged to people with good credit.

Borrowers approach mortgage brokers or conversely get brokers to cold call them.

Brokers handle approximately 70% of the origination. Brokers match prospective borrowers with lenders who further lure borrowers with exotic mortgages such as "no doc" mortgages, which do not require any evidence of income or savings.

Big banks and wholesale lenders buy the debt, repackage them and sell them to Wall Street firms.

Wall Street banks and investment houses further repackage these loans in mortgage backed securities (MBS) and collateralized debt obligations (CDO).

These structured products very often yield high rates of return and are sold to pension funds, hedge funds and institutions.

Many economists are blaming the crisis on exuberant brokers who lure borrowers into

mortgage deals.

Continue to the Next Page

The Subprime Loans Crisis

2009-11-06T20:22:00.000-08:00

The Subprime Loans Crisis
Part 2

These borrowers very often do not understand the types of loans or the contracts they sign, which denies the ability to asses true risk. The problem includes appraisers using inflated figures to value houses.

Lack of government regulation has also been blamed as being the cause of the problem.

Subprime lenders naturally foreclose on properties at a much higher rate than conventional lenders. Statistics show that approximately 3.3% of subprime loans end up in foreclosure compared to 1.1% for conventional loans.

The subprime meltdown is said to have begun in 2006, with escalating number of subprime house foreclosures.

The relationship between subprime meltdown and house prices is as follows:

As house prices drop, the equity value of home mortgages goes down, this creates an increase in mortgage defaults which will cause a further drop in house prices.

This positive feedback relationship will simply create a snowball effect until the economy has reasons to believe that there are reasons for the reverse to happen.

The subprime problem could also seep into other sectors in the economy. The housing slump is estimated to be able to strip 1-2 points off the GDP figure, furthermore, the downturn in the housing market will drag down the construction sector which will further affect other industries like i.e. plumbing, furniture and home improvements.

The FED responded to the crisis by prescribing methods to regulate the mortgage industry and enhancing laws where high levels of due diligence is needed in assessing borrowers ability to pay as well as make sure there is a much clearer understanding on the terms of the loans.

These guidelines were put forth with the hope to prevent or at least reduce fraud and abusive lending in the future.

Go Back to the Previous Page

Ponzi Scheme

2009-11-06T20:16:00.000-08:00

Ponzi Schemes

Ponzi schemes are a type of illegal pyramid scheme named for Charles Ponzi, a dapper 37-year-old Italian immigrant, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in 1919.

Ponzi conceived a unique arbitrage system and he thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons.

Ponzi told investors that he could provide a 40% return in just 90 days compared with 5% for bank savings accounts.

Ponzi was deluged with funds from investors, taking in $1 million during one three-hour period!

This bonanza started a frenzy that went beyond the Italian North End and spread throughout New England. When Ponzi was exposed by the Boston Post, he had taken in $10,000,000 and purchased less than $30 worth of International Reply coupons.

He had been redeeming his promissory notes with new funds from would-be greedy investors standing in block-long lines to reach his 16 clerks.

Though a few early investors were paid off to make the scheme look legitimate, an investigation found that Ponzi had only purchased about $30 worth of the international mail coupons.

In 1920 Ponzi went to federal prison for using the mails to defraud and later to Massachusetts state prison for grand larceny.

Receivers for his bankrupt Securities Exchange Company paid back about 35 cents on the dollar after puzzling over his bookkeeping for years.

Ponzi died a pauper in Brazil in 1949.

Decades later, the Ponzi scheme continues to work on the "Rob-Peter-to-Pay-Paul" principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses.

Modern Ponzi scheme victims are less likely to be ignorant immigrants but are still vulnerable because they are preoccupied with other concerns. Doctors, entertainers, and retirees, for example, are frequent targets of Ponzi-scheme promoters.

What best describes and distinguishes a true Ponzi scheme is motive. If the promoters intend to milk investors by paying for borrowed money with more borrowed money, fully realizing that the pyramid must collapse, then it can correctly be characterized as a Ponzi scheme.

Investor Pact

2009-11-05T00:49:00.000-08:00

The Investor Pact!

Risk is the price I must pay for opportunity!

I don't want to lose, but the capital I have invested is risk capital that I don't need to live on and wouldn't in any way change my style of living if I did lose.

I understand that the past is not a guarantee of the future. Even so, I believe that over time my investment should do well because the investment I have chosen has an excellent performance record, and has demonstrated recovery from every drawdown to achieve new highs!

Being human, I realize that my investment will have losing as well as winning periods. This is part of speculation.

I will not lose confidence or fall prey to my emotions during drawdown periods!

I will stay tough and hang in there!

I will have patience!

I will try to alleviate the anxiety, second guessing, and loss of confidence associated with drawdown periods.

I understand that investments do experience returns greater than savings ...

Nevertheless, the risk of loss exists and past results are not necessarily indicative of future results!

EBITDA Indicator

2009-11-05T00:46:00.000-08:00

The Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) is one of the indicators that companies can use to calculate their financial performance.

With the EBITDA indicator companies report their profits before the charges of depreciations and amortization, interest and taxes.

EBITDA = Revenues - Expenses
From the expences they exclude taxes, interest, depreciations and amortization)

This indicator is analyzing profitabilities amongst companies and sectors and can also portray a company's debt capacity.

Children Learning about Money

2009-11-05T00:22:00.000-08:00

Children learning about Money

Recently, the U.S Federal Reserve reported U.S. consumer credit reached a record $1.91 trillion, representing an 6% annual growth rate. At the same time, more than 1.7 million Americans now declare bankruptcy each year.

That's more than a 300% increase in the last 15 years, even though the population has only risen about 20% in that time.

What's more, the statistics also show that the situation is only getting worse. Consumption is growing faster than income, and the national savings rate hovers in the 3-4% range. (It even dipped below 1% a few years ago, the first time that has happened since the Great Depression!)

Obviously, new generations of Americans are learning some very questionable money management skills: Give into every impulse, save practically nothing, borrow as much as you can and let the devil take the hind most!

But there are also some good news. Despite the considerable marketing muscle of an out-of-control consumer culture, you can prevent your children or grandchildren from joining the "earn-it and burn-it" crowd.

You can teach them the difference between "good times" and good money habits, and you can help them actually begin to build wealth instead of debt, starting today.

From Tots to Tycoons

I don't talk stocks with my eight-year-old, but ever since he was four he's known exactly how much of each dollar he gets to put into the "spending" box on his dresser and how much goes into his "permanent savings."

This isn't difficult for him because he knows he can spend his money from the "spending" anytime on whatever he wants candy, "Magic" cards or comics. Or he can create a "temporary savings" box for bigger items he might have his eye on, like a skateboard or computer game.

The "permanent savings," however, he never spends or borrows from for any reason at all. The permanent savings are for one thing and one thing only building wealth.

Every few months, he, his older brothers and I sit down and we count out the money from their individual "permanent savings" boxes. I then take that money and put it into the custodial investment accounts I've set up for each of them.

I invest that money in mutual funds invested in sectors of the market that are markedly down from their highs. These are the kind of investments that might be volatile in the short term, but that tend to outperform the market over the long term.

And the long term is where kids really shine when it comes to investing.

In fact, it's one of the great advantages they have as young investors!

Children Have Three Fundamental Advantages over the World's Greatest Investors

Warren Buffet is considered the greatest investor who ever lived. He went from being a young college grad with very little money to amassing a personal fortune in excess of $30 billion, and he did it all from investing.

But there are three key areas where your children have major advantages even over Warren Buffet.

Children's 1st Great Wealth Advantage:

100% Disposable Income!

Your children have no bills to pay, no rent, no car loans, and no groceries to buy. They don't have other people to take care of.

Yet, they do have income!

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Children Learning about Money Part 2

2009-11-05T00:15:00.000-08:00

Even if it's just a few dollars a week, teach them to save and invest while they're at home (and have no expenses) and the results will be truly amazing. If they average just $2 a day in savings through the age of 21, then savings ratios of just 10% to 15% as adults, by the time they're ready to start families of their own, they can well acquire a "nest egg" of $200,753!

That's quite a sum for someone so young. And easily achievable even if they only make an average income as an adult. What's more, this only assumes the long-term annual average returns of the market for the entire 20th century, 12%, including bull and bear markets.

However, when investing correctly, it's reasonable to suppose slightly better returns. After all, they're investing for the long term and so can target the most downtrodden mutual fund categories.

And history tells us these are likely to produce the highest returns over the long term. Once we add this technique, the results are even more remarkable.

For instance, a few years ago, Wall Street money manager James O"Shaughnessey used Standard & Poor's entire Compustat database and tested various investment styles for long-term investment success.

In his book What Works on Wall Street, he reported that investing in value stocks with an emphasis on earnings growth produced 18.4% returns between 1952 and 1994.

At the same time, a study by the Wharton School shows small caps returned about 18.4% since 1951 and 1994.

If your children get these kinds of returns, their $2 a day through the age of 21 and reasonable savings and investment ratios as adults will turn into $673,137 by the age of 30!

And within three years after that, they'd have over $1 million by the age of 33 even if we suppose they never had an above-average-paying job in their lives!

These are examples of the power of investing early. But to make it work, you also have to take advantage of children's other unique strengths as young investors, including ...

Children's 2nd Great Wealth Advantage:

A Great Capacity to Learn!

During childhood, we have a greater capacity to learn than at any other time in our lives. This, for instance, is why it's so much easier to learn a second language when you're very young.

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Children Learning about Money Part 3

2009-11-05T00:08:00.000-08:00

But the same ability to quickly learn new skills and adapt to new conditions, can also have negative consequences. For example, most smokers picked up the habit as kids.

They yielded to peer pressure at a young age and later on in life so many of them have to struggle for years to "kick the habit" if they're able to kick it at all.

Children, in other words, can quickly learn good or bad habits that last a lifetime. And that's why they need their parents guidance. Not only to care and provide for them, but to help them develop habits and skills that will serve them well their whole lives long. And when it comes to money and material things, it's no different.

By teaching your children good money habits early on, you can see to it that money never becomes an obstacle in their lives.

And that means that instead of being overwhelmed by "life's bills," they'll have the financial freedom and confidence to focus on things that are more important than money.

Children's 3rd Great Wealth Advantage:

Time!

The third great wealth advantage children have is the greatest advantage of all. It's time! It's their single greatest advantage because nothing creates wealth like compounded returns over time.

In fact, all the riches in the world won't buy you time - yet your children have their whole lives in front of them.

By using time wisely, your children can still live the same fun-filled childhoods they do now, but with the important difference that they'll also have a few dollars quietly building up into a fortune as they grow up.

Children Are Uniquely Suited to Build Wealth Through Bull and Bear Markets

A final note: You may think now is not the right time to start investing in stocks for your children, since we're in the middle of a bear market.

The truth is now is an excellent time. And you can and should start any time as long as you're investing in the value sectors of the market for the long term.

By that, I mean those sectors that are significantly off their highs yet represent areas of the economy that will continue to grow over the long term.

To illustrate that point, let's take a simple example. Let's imagine it's the beginning of 1931 and we're about 15 months into a major bear market. And, for the sake of simplicity, let's say you can only invest in the S&P 500 (even though, in actuality, there are much better long-term values in today's market).

Back in the beginning of 1931, the market was already down over 60%. But worse was yet to come. Nonetheless, if you began to invest just $2 a day on behalf your children or grandchildren at that point, you'd be amazed at the wealth it would produce 30 years later.

By investing just $2 a day through the continuing bear market, final bottom a few years later and eventual, uneven recovery ... 30 years later, your children would end up with $221,396!

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Children Learning about Money Part 4

2009-11-05T00:05:00.000-08:00

$2 a day invested in the market from the beginning of 1931 would have turned into $221,396 by the end of 1960.

Of course your children would do much better than this since, as adults, they'd have the income and the habits to now invest far more than $2 a day.

And they'd have better options than just sticking with one index all the time. They could constantly rotate new money into the best value opportunities in the market.

Yet, even sticking with our simple assumptions, they built significant wealth from such modest investments. Their total invested would have been $21,900, which would have multiplied more than 10-fold in the course of 30 years, even investing through much of the worst bear market in history.

You'd get similar results by the way if you began to invest just $2 a day through the second greatest bear market of all time-that of the 1970s.

In that case, the market peaked in 1968. Yet, if you began to invest even at the beginning of 1970 (when the market was still more than twice the level it would sink to in 1973), your couple of dollars a day still would have created a nest egg of $386,617 thirty years later!

How is this possible to build this kind of wealth? Averaging just $2 a day right through the middle of the two worst bear markets of all time?

After the Depression and deflation in the first case and after stagflation, and the crash of "87 in the second case?

Because, in both instances, your children would have been investing steady, small sums over a long period of time, far longer than a single market cycle. And that means, though they initially suffered temporary losses of a few hundred dollars, they also continued to invest at the very bottom of the market and each time the market began a new bull cycle.

Children, in other words, are great investors in all sorts of markets because they truly are long-term investors who can afford to focus on value.

But you can only help them build that future wealth and financial security by getting them to practice good money habits right away.

As they grow up, their understanding of money will grow in lock step with the considerable growth of their wealth. The key is to let children take advantage of their great strengths as investors by beginning right away ...

Then, let time and compounding work their magic!

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In part by Justin Ford
FutureofWealth.com

Investment Properties and the Stock Market

2009-11-03T04:47:00.000-08:00

In the stock market there are three basic ways to decide about the investment properties and make a decision:

A. Market timing,

B. Security selection and

C. Asset allocation.

Market timing, including all forms of charting and "technical analysis," doesn't work because nobody can predict the future ... Period!

Investment properties and markets move in response to millions of people acting on random daily news, which can't be predicted.

If someone could market time with as little as 51% accuracy, they'd be on the front page of every newspaper every day!

Everyone you see predicting the future is just guessing or are just trying to convince you to buy the stocks they just bought so they'll go up, and they can sell at a profit.

It's their job to convince you that they can predict the future so they can move their products and sell their services.

Over time, their "mistakes" will lose you way more money than their lucky calls will make you money.

The only people who have the actual data needed to forecast investment properties and a stock's price are the people who work for the company - and they can't tell anyone because they'd go to jail by breaking insider-trading laws!

There's just too many stocks, too much news, and it all happens way too fast to cope with. Company news comes out of nowhere and could bring a stock down before anything can be done about it.

That's way too risky, so individuals, and pros that manage money for clients, should not waste time trying to pick stocks. But they love to do it because it's just so much fun to be a "player on the market."

Some do it because it's the only sales pitch they know how to tell!

It's humanly impossible to find the time to both manage clients assets in a way to get the results clients need and expect, and keep up with thousands of stocks on a daily basis.

Some may get lucky here and there, but over time the losses of their "mistakes" will greatly outweigh their lucky picks.

The biggest problem with security selection is knowing when to sell. You don't need to be an expert to know when a stock you've been following will go up. Just wait for accelerating earnings growth!

This is usually when people buy because they feel "it's safe now that it's going up." But that's usually when it's time to sell.

Nobody wants to sell anything that's going up, especially when it's a "great company," so they wait to try to get a few more bucks out of it. That's when it goes back down before they can sell it.

Then the investor goes into denial - which usually results in holding it forever because they don't want to take a loss.

You want to buy stocks when the news is bad, and sell them when the news is good. But this is the opposite of what most people actually do in the real world!

These kinds of things alone should be enough to convince people that stock pickers are not to be relied on for anything but recommending stocks they already own so they will go up and sell at a profit, while clients who bought it on their recommendations are left holding the bag!

Asset allocation is the only thing that works for people who manage money either for themselves or for clients!

It's the art and science of determining how much of the dozens of assets classes people should own based on their financial and life situation.

Yes ... indeed!

Asset allocation is very boring, and you're guaranteed to never double your money in one year.

But ... it will most certainly get you the best long-term results!

Global Warming Effects on Us Right NOW

2009-10-27T22:07:00.000-07:00

How do we (humans) start to have less of an impact on our only home, earth?
Is the earth a finite resource? Yes. The problem is that economic theory was based on an “empty world.” Instead, we need to move to “full world” economics. The basic rule of microeconomics, that optimal scale is reached when marginal cost equals marginal benefit (MC = MB), has aptly been called the “when to stop rule”—that is, when to stop growing. In macroeconomics, curiously, there is no “when to stop rule,” nor any concept of the optimal scale of the macroeconomy. The default rule is “grow forever,” consume forever, grow, grow, grow!

Does the earth have finite material resources? Yes.

While growth must end, this in no way implies an end to development, which we define as qualitative change, realization of potential, evolution toward an improved, but not larger, structure or system—an increase in the quality of goods and services (where quality is measured by the ability to increase human well-being) provided by a given throughput. Most of you have ceased growing physically, yet are probably studying this text in an effort to further develop your potential as humans. We expect human society to continue developing, and indeed argue that only by ending growth will we be able to continue developing for the indefinite future.

The sole source of inflowing energy to our earth is the SUN. It’s our sole source of energy, and that’s what we are implementing here in our company, Tower One Energy Group. Harnessing clean power that is truly sustainable, forever.

George Soros to Invest $1 Billion in Green Energy

2009-10-27T21:57:00.001-07:00

The upcoming climate talks in Copenhagen are less than two months away, and everyone is looking to throw in his/her two cents. On Oct. 10, it was billionaire George Soros’ turn to get in on the act. Giving a speech in Denmark, the man who famously ‘broke the Bank of England’ in the early 1990s now plans to invest $1 billion in clean energy technology. Another $100 million — doled out in $10 million increments annually over ten years — will fund the newly-created Climate Policy Initiative, a foundation targeted at environmental policy.

That’s a sizeable amount of cash, though Soros didn’t specify where the $1 billion would be spent other than saying ‘stringent conditions’ will be used to evaluate potential investments. And in an ironic twist, Soros, who made a sizeable chunk of his fortune through currency speculation, put his support behind carbon taxes, not cap-and-trade systems. His reason? Financial investors can too easily manipulate carbon markets.

Soros is wise to keep his cards close to his chest. With so much money on the table, potential deals could be given a ‘Soros premium’ if the billionaire focuses on a too-narrow clean energy brief. But some of his likes/dislikes are already known. Soros, for instance, has invested in clean coal technology, including Portsmouth (NH)-based Powerspan Corp that specializes in carbon capture technology.

Yet before we start speculating too much on where Soros will spend his cash, a word of caution is merited.

Other high-profile figures, such as T. Boone Pickens, have made similar promises of multi-million dollar investments. Often, though, their plans have come to nothing. That obviously doesn't mean Soros won't go ahead with his $1 billion scheme. But until concrete plans are announced, I'll reserve judgment. As Rod Tidwell (from Jerry Maguire fame) once said: 'show me the money.'

Indeed, the more important figure -- for me -- is $25.9 billion. That's the amount of money invested in green energy projects in the third quarter of 2009, according to New Energy Finance. After a shaky start to the year, investors are now more willing to fork out for clean energy projects. The gradual thawing of the credit markets certainly has helped. So have government-sponsored funds -- like renewable feed-in tariffs or other subsidies for green technologies -- that were included in global stimulus packages.

So with investment returning to the sector, maybe Soros has picked a good time to buy in. Other investors will keep a close eye where he puts his money.

Renewable Energy Act of 2008

2009-10-27T21:50:00.000-07:00

Finally, after some rough sailing and being bypassed by five Congresses, the renewable energy bill was finally signed into law by President Gloria Macapagal Arroyo . She hopes that it would attract investments and enable the country to achieve greater energy independence.

Now a law, the Renewable Energy Act of 2008 (Republic Act 9531) seeks to promote the development of renewable energy resources and its commercialization. It aims to achieve this by providing incentives to institutions that invest in the sector. Sources of renewable energy includes the sun, wind, bodies of water, organic matter and the earth’s heat.

In her speech, Mrs. Arroyo said “Last year, when renewable energy reaped a milestone $71 billion in investments, even oil giants like Abu Dhabi put up a special renewable energy corporation. Our Renewable Energy Act would enable us to capture a part of this investment flow through… tax holidays, tax credits, and other incentives,” she also added that the measure was timely because it mitigates the impact of climate change.

“Most of the energy to be generated will come from wind hydro and solar and biomass,” according to Mario C. Marasigan, director of the Energy Department’s Energy Utilization and Management Bureau. “Hopefully in the next two years, we will have somewhere around 500 to 1,000 megawatts and somewhere around $20-25 billion worth of investments… We will reach 60% energy independency by 2010,” he added. Presently, we are only 58% energy-independent.

This development brings a lot of promise and hope to the country. With the rising cost of our main source of energy which is the fuel, and the global financial crisis, we have something good to look forward to. Let’s just hope that its implementation will not be hounded by too much politics and other self-serving agenda by our lawmakers and other influential institutions.

Philippines would become one of the leading consumers of alternative and renewable energy sources

2009-10-27T21:48:00.000-07:00

Two of the Philippines’ leading trading have expressedoptimism that the country would be a major destination for renewable energy investments.

British Ambassador Stephen Lillie and Dr. Walter Salzer, of the German Technical Cooperation (GTZ), noted the potential of the Philippines in gaining investors in the production of wind, solar, geothermal and biomass energies.EAN ENERGY. Both British and German investors are optimistic that the Philippines would become one of the leading consumers of alternative and renewable energy sources.File photo by Joseph Holandes Ubalde

“The Philippines could be the ‘Saudi Arabia of Biomass.’ It has got the right conditions in place," Lillie said.
In 2007, British company Bronze Oak established San Carlos Bioenergy. Besides being expected to supply 100,000 liters of ethanol, the facility is seen to generate nine megawatts (mW) of electricity and another five mW for export to the grid.

Another British company is eyeing a methane power plant in the former landfill in Montalban, Rizal, Lillie said.

While British investors are enthusiastic about the Philippines’ renewable energy prospects, domestic banks have not shown support for such investments, so far.

The country – Southeast Asia’s fastest growing economy two years ago – ranked ninth among emerging markets for global investors this year from 23rd place a year ago, new research released by the UK Trade and Investment said.

The UK is the top contributor to the Philippines’ foreign direct investments, placing $298.17 million last year by acquiring long-term stakes in local companies, putting up factories, or purchasing equipment.

“It would be great if the Philippine banks would show enthusiasm for this," he said.

Meanwhile, Salzer, GTZ’s program head, said the pressing issue of climate change has prompted many German companies to go green.

With this development, they have turned to emerging economies like the Philippines to establish renewable energy sources.

“Renewable sources are hardly used but have high potential in the Philippines," Salzer said during the launch of the Mabuhay Germany trade expo on Thursday.

Germany has replaced 70 percent of its energy consumption to renewable sources after setting up systems for the general population to easily invest in alternative energies like solar or wind, he said.

The German government has helped the Philippines address climate-change related concerns through its Official Development Assistance agencies such as the GTZ, KfW Development Bank, German Development Service, among others.

KfW, Europe’s biggest promotion bank, has even provided a significant portion of some €10 million (roughly Php680 million) in German-Philippine Technical Cooperation and €46.7 million (Php3.2 billion) in German-Philippine Financial Cooperation.

Germany is the Philippines’ second biggest European trading partner that is consistently within the country’s top ten biggest investors. - GMANews.TV

2009-10-27T21:27:00.000-07:00

INVESTMENT

2009-10-27T21:06:00.000-07:00

Invest in projects that achieve the Triple Bottom Line.

We enhance project financial returns by incorporating socially and environmentally responsible components into our ventures. We focus on developing projects that achieve the triple bottom line: benefiting people and the planet by providing prosperity for both Member-Partners.

1. Our Prosperity
Harness a secure, constant, zero-cost fuel source. Imagine the magnitude of this opportunity and what it can do to your balance sheet . . .

2. Our People
By focusing our efforts on individual neighborhoods, communities, or regions, we can ensure that a vibrant local economy emerges through the introduction of renewable energy and renewable wealth . . .

3. Our Planet
Our historic reliance on fossil fuels is jeopardizing Philippines independence, economy, and environment. We cannot continue to invest in infrastructure that depends on a finite resource . . .

Our Duty to Our Member-Partner Communities
While we always give our partner communities and local investors investment Right of First Refusal, there exist multiple opportunities for individuals, groups, and companies to invest in Tower One projects.

Possible investment vehicles include:

Equity Partnership
Capital Venture
Private Investors
And many more options. . .
Can you think of others?

We’re excited to explore these opportunities with you in order to fulfill the dreams of our partner communities and clients. Together, we can make a measurable impact on this everchanging world.

TRAINING SOLUTIONS

2009-10-27T21:00:00.000-07:00

NEW! Renewable Energy Training Solutions for New Jobs in the RE Industry

Millions of jobs will be created in the near future for over 200 job categories from technicians, installers, engineers, and scientists to urban planners and system designers.

Combining green technologies & tech training know-how, Tower1 Group are introducing the Green Technology / Alternative Energy Training Program, a new set of professional teaching tools that focus on the technical fundamentals in several major green technologies.

Using "real-scale" training panels, the theory of each major green technology is covered in detail and designed to prepare individuals for new jobs in the energy sector. Students will learn hands on the underlying science of each major technology, the application of the science to these technologies, math principles associated to these technologies and the design and engineering principles required to implement and scale the technologies. Interested students may also work towards industry-level certifications as wind turbine or solar PV cell installers, energy systems designer, smart grid engineers or clean energy plant project manager and many more.

Tower1 Group now offering the new RE TECHNOLOGY TRAINERS - large scale educational panels for the teaching and understanding of new technologies and their functioning.

These panels come with an amazing amount of technology and are of great value to universities and training centers. They can provide up to 180hrs of exercise training and they get students to a level to be able to take the ETA certification tests for integration of these systems into everyday electrical system including residential. These new panels are proving very popular in universities across the US, with States like New York and Carolina taking them as the standard training course for their universities.

Clean Electron Technology Trainer

Lab & Theory

Basic Wind Turbine Operation

Installing and Testing a Wind Turbine

Off-Grid Wind Turbine Systems

Configuring and Testing Off-Grid Installations

Wind Power System Design

Design/Create a Wind Turbine

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Basic Solar Power Operation

Installing, Combining and Testing Solar Cells

Advanced Solar Panel Systems

Configuring, Testing and Operating Off Grid Solar Installations

Solar Power System Design

Design/Create a Solar Charging System for Portable Hand Held Devices

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Basic Fuel Cell Operation

Connecting a Fuel Cell for Electrical Generation

Advanced Fuel Cell Operations

Configuring, Testing and Operating Off Grid Fuel Cell Installations

Adding a Fuel Cell to an Alternative Power Systems

Connecting a Fuel Cell into Alternative Energy Systems for Off Grid Operations

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Combining Wind and Solar Power Systems

Configuring and Testing Combined Alternative Energy Systems for Off Grid Operations

Combining Wind and Solar Power Systems

Configuring and Testing Combined Alternative Energy Systems for Off Grid Operations

Connecting Alternative Power Systems to the Grid

Configuring and Testing On Grid Installation

We would appreciate receiving any feedback you have on our products and would love to hear from you if you are interested in receiving our pricing.

We look forward to hearing from you.

SOLUTIONS

2009-10-27T20:52:00.000-07:00

Tower One Group is a technology agnostic company.

We don’t play favorites with one particular technology. We simply assess and determine what technology works best for your particular situation. You’ll get the optimal system to minimize costs and possible impacts while fully utilizing the resources available at your location.

Tower One provides Product and Services for:

*Wind Power

*Solar Power

*Hydrogen Fuel Cells

*Technical Training Module

*Renewable Energy Science Kits

*Hobby Toys

If we find that there is particular technology that we don’t currently list above, we have a number of friendly business partners that can help to ensure that we can design an optimized vision, plan, or project for you.

ABOUT US

2009-10-27T20:40:00.000-07:00

Tower One Management Consultancy Service plans, designs, and facilitates the advancement of community-based alternative energy projects and sustainable ventures.

We are committed to providing your cause with innovative renewable energy and sustainability solutions. Our services help public and private entities to optimize their energy portfolios into the future.

What We Do

Through a transparent, community-based development process, we find holistic energy and sustainability solutions to address your technical, environmental, and economic challenges. Our team will ensure that you successfully reduce your reliance on unreliable energy sources and help to develop a more sustainable way of living and conducting business.

We work with a variety of clientele including:

Business and Industry
Municipalities and Academia
Landowners
Developers

Residential Owners

Our consulting services are continually growing and merging into new markets, and our products and project facilitating capabilities for wind and solar power. Tower One Group help municipalities plan for a future with wind or solar power, allowed landowners to assess and value their property for alternative energy project development, and conducted the first national wind or solar power site ranking for one of the premier wind or solar power developers in the Philippines. We’re dabbling in wind or solar resource prediction, social investing, and alternative energy as local economic development drivers.

We have partnered with national and local firms to meet our clients’ specific energy needs. We are actively pursuing the financing of community-scale and large-scale wind or solar power projects throughout the Philippines.

Come live, act, and prosper sustainably with us

ENERGY CLEAN TECHNOLOGY

2009-10-27T19:50:00.000-07:00

NEW! Technical Training Solutions for New Jobs in the CLEAN Tech Industry
Tower 1 and our partner company are introducing CLEAN Technology/Alternative Energy Programs for students and individuals of all ages looking to build a career in the fast-growing and global CLEAN Tech industry.

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BACK

Fundamentals of Economics

2009-10-27T07:03:00.000-07:00

If you asked all economists a simple question, they would never reach to a conclusion!

But there are some fundamentals on which virtually all economists will agree. These fundamentals are the Principles of Economics and below you will find five of these Principles:

1. You Can't Always Get what You Want!

Economics focuses on understanding how individuals, families, businesses, and governments make choices under conditions of scarcity. So how do these people choose? They just make the choices that they believe will make them happiest.

2. People Always Choose for a Reason!

We presume people select products to maximize their happiness and that businesses try to maximize their profits. There's no right or wrong choice here; whatever gives you more pleasure is the better choice for you.

Of course, a choice we think will make us happy or give us big profits might end up doing nothing of the sort.

3. People Respond to Incentives

Economists don't assume incentives alter everyone's behavior, only some people's conduct. Nor do economists assume that people refuse to act for altruistic reasons, only that economic incentives have a reliable and predictable impact.

4. Money Makes the Markets "Go Round"

Money is like a common denominator that everyone has agreed to take in trade for their goods and services.

Money cuts way down on the transaction costs of trading, thereby making more trades possible and making people better off.

5. The World Is an Uncertain Place but We Have to Live Here Anyway!

People generally dislike risk ...

They hate it so much, usually, that they are willing to pay others great sums of money to reduce risk - that's the idea behind insurance!

Generally, anything that reduces uncertainty and risk helps people make better decisions, which in turn makes them happier.

Investing and Economic Indicators

2009-10-27T07:02:00.001-07:00

As an investor it is important to understand how economic indicators can impact financial markets, investing and ultimately the value of your investments.

The key to your success will be looking at these economic indicators, extracting what you need to make the right investment decisions.

Economic Indicators are key statistics that show where the economy is headed by monitoringinflation.

The reason why inflation is of paramount importance is based on the fact that it highly influences the level of interest rates.

Stability within the economy is maintained as long as inflation is kept under control. Rising inflation reflects rising prices caused by demand and exceeding supply.

In other words, the increase in prices of goods and services would erode the purchasing power of the money you make, on the assumption that the money you earn does not increase in line with inflation.

To put it simply, Governments use economic indicators as tools to ensure stability within the economy.

Consequently the individual indicators of inflation like the consumer price index; unemployment and gross domestic product cannot be directly manipulated; therefore to slow down (or speed up) the rate of growth in prices (inflation), interest rates are used.

Interest rates determine the willingness and ability of individuals and businesses to borrow money and make investments. Changes in economic activity, when triggered by changes in interest rates, can fuel an expansion or cause a downturn in the economy.

For companies, higher interest rates often mean lower profits. If interest rates rise, companies have to pay more, to borrow the money they require to fund growth of their company.

Eventually, this translates into higher prices for their goods and, often, lower sales. Especially if customers are buying on credit and have to pay higher interest rates for them to borrow. Potential customers may decide they cannot afford to buy products as the cost of credit is high.

The eventual decline in company sales and earnings is something investors anticipate as soon as rates go up. The result is that stock prices go down before the effects of the increased interest rates are actually felt on the company's bottom line.

Conversely, when interest rates fall, company borrowing costs are lower, so their profits on the same level of sales will be higher.

Therefore, customers who buy on credit are more comfortable buying if they are paying lower rates, so they buy more.

This creates higher sales, which will lead to increased company profits. Eventually higher profits will lead to an increase in stock prices.

More often than not, the above situation creates an environment where investors are typically ready to pay higher prices as soon as the Central Bank intervene to cut interest rates in the anticipation of the cycle of increased profits.

As an investor it is important to remember that the price of your stock will change throughout its lifetime because the price you actually obtain will be determined by current market conditions (supply and demand) and more importantly interest rate fluctuations. This will also determine the capital you will gain or lose.

So when next time you hear about economic indicators, always remember how they will affect the value of your stocks and whether you would need to re-evaluate your positions.

Seven Steps to Financial Freedom

2009-10-27T06:58:00.000-07:00

A Get Rich Slowly but Surely Plan in Seven Steps!

It's true that money can't buy happiness, but it certainly can help you live the life of your dreams!

You don't need fancy investment strategies to become financially secure, and you don't need to win the lottery either!

Here are seven simple steps you can take to help you reach your financial goal:

1. Make a Budget:

Budgets are a necessary evil. They're the only practical way to get a grip on your spending so that you can make sure your money is used the way you want it.

Creating a budget generally requires three steps:

A. Identify how your money is spent today.

B. Evaluate that spending and set goals that take account of your financial objectives.

C. Track your ongoing spending to make sure it stays within those guidelines.

2. Pay Yourself:

Save 5-10% of your paycheck to a separate account before you have a chance to spend it and you will soon realize a great wealth! Best of all this will grow your "nest-egg" without changing your lifestyle!

3. Get the Most for Your Money:

Place the same amount of money each and every monthinto an investment, thus helping your fortune grow steadily over time!

4. Make Your Assets Work:

Convert savings accounts into higher-paying money market accounts. Sell unneeded items and invest the proceeds. Invest in stocks rather than bonds and guaranteed income funds.

5. Know about Compound Interest:

The secret of compound interest is time! Compounding simply works better over time!

6. Pay Lower Taxes:

The only two things certain in this life are death and taxes. Though we all must pay taxes, there is no patriotic reason to pay any more than our fair share. Be smart... Check this possibility with a good accountant and do some research!

7. Build Your Plan:

Build a financial time targeted investment plan and stick to it! Like most people, you know that you have to save and invest your money, but, without clearly defined goals and objectives, it's hard to know how fast to save, whether the return on your investment is high enough, and if the investment is safe enough to rely on to be there when you need it.

Knowing and understanding the desired outcome of your investment will help keep you motivated and focused.

Knowing and understanding your personal investment goals will help you determine what to seek from your investments.

Finally, before investing, ask yourself:

Why do I need my money to grow and ...

When do I want to use it?

Evaluate Your Financial Situation

2009-10-27T06:55:00.000-07:00

"Wonder is the foundation of all philosophy,
inquiry the progress, ignorance the end!"
Michel de Montaigne (1533 - 1592)

Financial independence is one of the most important goals for most people.

Yet people sometimes miss the opportunity to become financially independent because they avoid making decisions and taking action to influence their financial well being.

Sometimes they may not know what action to take. At other times, they simply procrastinate.

Understanding and evaluating where you stand today in terms of your finances is the first step in taking action and developing any sound investment plan.

You have to determine your net worth (your assets minus your liabilities) and what percentage of your resources you can apply to meeting your financial goals.

Net worth is the main measurement of your wealth. The best ways to increase your net worth are to increase your assets and to reduce your debts.

The other number to look at in evaluating your financial situation is your net income (your gross income minus your expenses).

Try tracking all of your expenses and gross income for several months. The results will help you to determine where your current income comes from and where it goes.

This information can help you better budget your spending and decide how much money you can set aside for meeting future needs and goals.

Many people find they are spending more than they bring in. It's difficult to increase your net worth in order to meet your financial goals, if you are constantly falling behind on the income front.

Most causes of overspending can be resolved through the use of a budget. By setting up an annual budget can help you prioritize and limit your expenses and in the same time uncover ways to free up more money to use for savings and investments.

Above all, remember that arriving at a workable financial strategy is a negotiation process.

It's very healthy to admit who you are when it comes to money! Too often people try to give up who they are and it backfires.

You need to know what you can't give up, as well as what you wouldn't mind giving up.

forex videos

2009-10-27T05:00:00.000-07:00

The Richest Man In Babylon

2009-10-27T03:49:00.000-07:00

The 7 + 1 Cures for a Lean Purse
Paraphrased excerpt from "The Richest Man In Babylon"

Start thy purse to fattening: "For every ten coins thy placest within thy purse take out but nine. Thy purse will start to fatten at once......"
(Save at least 10% of everything you earn!)
Control thy expenditures: "Budget thy expenses that thou mayest have coins to pay for thy necessities......enjoyments......thy worthwhile desires......without spending more than nine tenths of thy earnings......"
(Establish a spending plan and spend only what you have after you have put away your 10%)
Make thy gold multiply: ".....put each coin to laboring that it may reproduce its kind......"
(Make your money work- don't put it in the mattress- invest it!)
Guard thy treasures from loss: "......Consult with wisemen...those experienced in the profitable handling of gold......protect thy treasure from unsafe investments."
(Obtain professional advice and invest in solid performing companies!)
Make of thy dwelling a profitable investment:".....own thy own home."
(Choose your home, and its location carefully and plan on that your home will be an appreciating asset.)
Insure a future income: "......provide in advance for the needs of thy growing age.... no matter how prosperous his business......"
(Do a retirement plan! Know- don't guess- what you will need to live, the way you want to live!)
Increase thy ability to earn: "......cultivate thy own powers, to study and become wiser, to become more skillful, to act as to respect thyself."
(Engage in constant self-improvement. Keep your skills current. Technology and time will eventually make your skills obsolete!)
This last one is from me: Build ye an investment investigation source!
(To become wealthy seek the council ofprofessionals!)

When NOT to Invest!

2009-10-27T03:46:00.000-07:00

When NOT to Invest!

Unfortunately, many investors who are seduced by the lure of easy money try to become "active" investors before they have the skills, the resources, or the appropriate intellectual framework to do so.

This is not to say that investing in stocks is extraordinarily difficult ...

It is not!

However, beating the market on a regular basis is far from easy and requires that an investor bring to the investing process a singular discipline, knowledge, or passion that will allow him to rise above the herd.

Like in any other competition, not everyone can win! In fact, for every amount of money that outperforms the market, somebody else's money is not doing quite so well!

How can you tell if you are ready to become an "active" investor?

Not an investor who buys and sells stocks on a regular basis, but active in the way the academics mean it -- someone who selects his own stocks.

It is not like there is a licensing process or anything. In fact, there is not even a formal course of instruction.

Much like parenting, you tend to find out if you are really cut out to be an investor only after you have made a pretty substantial commitment!

In my opinion, you should not be investing in stocks:

... If you need the money within two to three years at the least.
... If you don't like to do math.
... If you use the word "play," "gamble," or any similar speculation-oriented word when you describe your investments!
... If you think indexes matter more than what companies you own.

... If you are unprepared for volatility:

A lot of people look at the returns for the stock market only to turn pale at the first loss!

If you cannot stand to lose money, you should not own stocks ...

Period!

... If you think you will only ever buy stocks that go up:

You are not perfect! No system is perfect. No provider of advice is perfect.

You can -- and will -- lose money at some point during your investment career!

You can minimize this loss only if you do your homework and are careful about valuation ...

But money lost is money lost.

Continue to the Next Page

When NOT to Invest! Part 2

2009-10-27T03:44:00.000-07:00

... If you believe that the share price alone or share price movements alone tell you anything about the underlying quality of the company or its business:

All too often people buy low-priced shares with the idea that they are cheap, only to find out that they are low-priced because the underlying business sucks.

... If you couldn't write down a list of why you bought and what might make you sell:

If you don't know why you bought a stock in the first place, how can you know when to sell it? Bad scene. Avoid it.

... If you cannot tell the difference between a balance sheet and an income statement:

Especially if you don't even know where to find a copy of either.

... If you cannot make a rudimentary assessment of the underlying quality of a company.

... If you cannot define any of the following words:

Gross margin, operating margin, profit margin, earnings per share, costs of goods sold, share buyback, revenues, receivables, inventories, cash flow, estimates, depreciation, amortization, capital expenditure, market capitalization or valuation, shareholder's equity, assets, liabilities, return on equity.

... If you only have one source of information about the company:

I don't care whether it is your best friend, a message board, or some content provider.

If you cannot independently verify the facts, you are bound to get unintentionally bamboozled.

No one likes to admit he is wrong. If you only depend on one source of information, odds are when it finally coughs up the conclusion that it made a bad call it will be too late!

... If you cannot name the major products a company makes or the company's major competitors.

... If you don't use the Internet:

Seriously folks, come on!

Almost all of the disadvantage of being an individual investor from the information side was erased by the Internet. If you aren't on it, you are at a major disadvantage to all of the other players.

It is like trying to wrestle with no limbs!

Go Back to the Previous Page

Investing Is a Business ... Treat it that Way!

2009-10-27T03:41:00.000-07:00

"If you're in business you either control the money or you control the product, one or the other ... or you'll be taken for a ride!"
(Old Sage Business Advice)

Investments are most intelligent when they are most businesslike!

It is amazing to see how many capable businessmen try to operate with complete disregard of all the sound principles through which they have gained success in their own business.

Yet every corporate security may best be viewed, in the first instance, as an ownership interest in, or a claim against, a specific business enterprise.

And if a person sets out to make profits from security purchases and sales, he is embarking on a business venture of his own, which must be run in accordance with accepted business principles if it is to have a chance of success!

The first and most obvious of these principles is:

"Know what you are doing. Know your business!"

For the investor this means:

Do not try to make "business profits" out of securities - that is, returns in excess of normal interest and dividend income - unless you know as much about security values as you would need to know about the value of merchandise that you proposed to manufacture or deal in.

A second business principle is:

"Do not let anyone else run your business, unless:

You can supervise his performance with adequate care and comprehension or
You have unusually strong reasons for placing implicit confidence in his integrity and ability.

For the investor this rule should determine the conditions under which he will permit someone else to decide what is done with his money.

A third business principle is:

"Do not enter upon an operation-that is, services, manufacturing or trading in an item-unless a reliable calculation shows that it has a fair chance to yield a reasonable profit. In particular, keep away from ventures in which you have little to gain and much to lose!"

Continue to the Next Page

Investing Is a Business ... Treat it that Way! Part 2

2009-10-27T03:40:00.000-07:00

For the enterprising investor this means that his operations for profit should be based not on an optimism but on arithmetic.

For every investor it means that when he limits his return to a small figure - as formerly, at least, in a conventional bond or preferred stock - he must demand convincing evidence that he is not risking a substantial part of his principal.

A fourth business rule is more positive:

"Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgment is sound, act on it-even though others may hesitate or differ."

You are neither right nor wrong because the crowddisagrees with you. You are right because your data and reasoning are right!

Similarly, in the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand.

Fortunately, for the typical investor, to achieve satisfactory investment results is easier than most people realize!

But, to achieve superior results ...

Is much, much harder than it looks!

Go Back to the Previous Page

Stock Market Fraud

2009-10-27T03:38:00.001-07:00

Stock Market and Securities Fraud

"The market is a place set apart where men may deceive each other!"
Diogenes Laertius (Circa 200)

How many ways are there to be cheated?

Shall I count the ways? Well ...

No one can!

There can be as many ways to cheat investors as there are swindlers, con artists, and unscrupulous brokers and ...

There are quite a few of those out there!

When you invest your hard earned money with a stockbroker, you do so with a level of trust, and this trust is backed up with strong legal protections to protect your interests. Nevertheless, investment and broker fraud is all too common.

Brokers take advantage of the fact that they are entrusted with large sums of money and sometimes can create scams to defraud the investors.

If you have experienced large losses to your account, sometimes the responsibility may lay with your broker.

Securities litigation is a very complex and specialized area of the law. If you feel your rights have been violated, your best recourse is to seek an experienced professional to assist you.

Have you been the victim of bad investment advice?

Did your stockbroker recommend risky investments without explaining the risks?

Did your stockbroker make trades without your understanding or authorization?

Did your stockbroker excessively trade your account?

Securities investing and trading is carefully regulated by rules and laws for the protection of public investors. The violation of these rules, particularly through various deceptive actions and schemes to cheat or take advantage of investors, is commonly known as securities fraud.

If you believe that you may have been a victim of securities fraud, you have certain rights, which you should be aware of, rights which may provide you an opportunity to recover your losses from your stockbroker or brokerage firm.

Most investors who have been defrauded do not know what happened to their investments until it is too late.

But even after the losses have occurred, the law provides mechanisms for investors to recover their losses, which were caused by a stockbroker's misrepresentations or abuse of the account.

Stock brokers and brokerage firms have certain obligations and duties to their customers. And investors have a right of recourse if their account has been abused or if they have been defrauded by an investment advisor.

An investor who believes that he or she may have been the victim of an unscrupulous stockbroker should consult with an attorney to learn more about their rights under the circumstances.

Most investment advisors and stock brokers are honest, decent individuals who follow the rules of the securities industry and provide a valuable service to the public.

Unfortunately there are some unethical and dishonest investment advisors, and there are some brokerage firms that do not supervise their brokers and accounts as carefully as they are required.

Hopefully, a better informed investor will be better able to protect himself, evaluate what has happened in an account, and have some idea what might be done about it!

All investors should be aware of their rights in order to better protect themselves and to have a higher level of awareness of the standards to be expected in an investment relationship.

Many stock brokers' and customers' disputes might be avoided by better informed investors going into their relationships with their eyes open and knowing their rights!

Venture Capital Investments and Funds

2009-10-27T03:34:00.000-07:00

Venture capital is capital provided by somewhat outside investors for financing of new, growing or struggling businesses.

Venture capital investments generally are high risk investments but offer the potential for above average returns.

A venture capitalist (VC) is a person who makes such investments. A venture capital fund is a pooled investment vehicle (often a partnership) that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans.

For aspiring entrepreneurs looking to locate and secure venture capital they have the option of seeking the support of a mentor capitalist.

A mentor capitalist is an expert not only in acquiring capital but can also provide support and direction to early start-ups and seeds.

Venture capital general partners (also known as "venture capitalists" or "VCs") may be former chief executives at firms similar to those which the partnership funds.

Investors in venture capital funds (limited partners) are typically large institutions with large amounts of available capital, such as state and private pension funds, university endowments, insurance companies, and pooled investment vehicles. Other positions at venture capital firms include venture partners and entrepreneur-in-residence (EIR).

Venture partners "bring in deals" and receive income only on deals they work on (as opposed to general partners who receive income on all deals).

EIRs are experts in a particular domain and perform due dilligence on potential deals. EIRs are engaged by VC firms temporarily and are expected to develop and pitch startup ideas to their host firm (although neither party is bound to work with each other).

Venture capital is not suitable for all entrepreneurs. Venture capitalists are very selective in deciding what to invest in; as a rule of thumb, a fund invests only in about one in four hundred opportunities presented to it.

They are most interested in ventures with high growth potential, as only such opportunities are likely capable of providing the financial returns and successful exit event within the required timeframe that venture capitalists expect.

Because of such expectations, most venture funding goes into companies in the fast-growing technology and life sciences or biotechnology fields.

If a company does have the following qualities that venture capitalists seek:

1. Solid business plan.

2. Good management team.

3. Investment and passion from the founders.

4. Good potential to exit the investment before the end of their funding cycle and

5. Target minimum returns in excess of 40% per year.

For the company it becomes much easier to get venture capital.

My Only Piece of Investing Advice!

2009-10-26T02:48:00.000-07:00

If I had just one piece of investing advice to give you ...

One thing you must know in order to survive and prosper as an investor throughout any time period, bull market or bear ...

One investing advice few investors understand and really know ...

An advice you will not easily be able to explain to your friends or family ...

An advice that people simply will not want to accept its truth ...

An advice that the greater majority of the professional investment community really doesn't want you to know, because if you understand it, you will not be a very profitable client to them ...

An investing advice, which is well-known among the best investors and perhaps, you too will not want to accept it ...

The following would have been my best investing advice:

Investing Is a Loser's Game -- Never Forget that!

What determines investing success and what determines failure? Are there principles that can be understood to help the individual invest more successfully?

I believe that the best principle that can be adopted by the individual investor is to ignore the market, minimize trading expenses, think a bit like a business owner, invest long-term, and, most crucially, know his/her limitations as an investor.

Investing Is "A Loser's Game!"

It is a loser's game, not only at the amateur level, but also at the professional level. Over time, trying harder to achieve superior returns will usually lead to inferior ones.

Playing investing like a loser's game means taking advantage of long-term compounding, diversification,managing risks, and controlling the urge to get involved inspeculative excess.

If you understand only this single concept, that investing is a loser's game, you will do well as an investor throughout your life!

Fund of Funds

2009-10-26T02:02:00.000-07:00

A Fund of Funds is a Fund that mixes and matches the most successful Hedge Funds and other Mutual Funds and pooled investment vehicles, spreading investments among many different Funds or investment vehicles.

Hedge Fund strategies are complex and varied in their ranges of risk vs return. Even within a particular style, no two managers are likely to be exactly the same.

Each fund manager will apply different amounts of hedging or insurance to his/her portfolio and will employ different amounts of leverage.

A Fund of Funds simplifies the process of choosing Hedge Funds, blending together Funds to meet a range of investor risk vs return objectives while generally spreading out the risks among a variety of Funds.

This blending of different strategies and asset classesaims to deliver a more consistent return than any of the individual Funds.

Advantages:

A. Returns, risk and volatility can be somewhat controlled by the mix of underlying Funds.

B. Capital preservation is generally an important consideration.

C. Volatility depends on the mix and ratio of strategies employed.

Creating a Fund of Funds can be likened to baking a cake. Working from the same ingredients such as flour, butter, sugar, yeast, eggs, etc., a baker is capable of producing various different cakes.

So it is with a Fund of Funds. Understanding the characteristics and risk profiles of the different Hedge Fund strategies, allows the Fund of Funds manager to blend Funds together that often are able to produce fairly predictable returns.

Predictability of future returns is greater with a Fund of Funds!

In any investment strategy the predictability of future results is strongly correlated with the volatility of past returns of each strategy.

Future performance of strategies with high volatility is far less predictable than future performance of strategies experiencing low or moderate volatility.

Participants in the Mutual Fund industry, where the volatility of past results is high, know how impossible it is to predict future performance.

However, within the Hedge Fund industry many of the hedging strategies are able to produce consistent returns that are highly predictable.

As a result, focused Funds of Funds, utilizing some of these low-volatility strategies, are often able to produce predictable returns, not correlated to market direction.

Hedge Vs Mutual Funds

2009-10-26T02:00:00.000-07:00

What are the differences between a Hedge Fund and aMutual Fund?

There are mainly five key distinctions:

1. Relative Performance:

Mutual Funds are measured on relative performance. Their performance is compared to a relevant index such as the S&P 500 Index or to other Mutual Funds in their same sector.

Hedge Funds, on the other hand, are expected to deliver absolute returns by attempting to make profits under all circumstances, even when the relative indices are down.

2. Regulation:

Mutual Funds are highly regulated, restricting the use of short selling and derivatives. These regulations serve as "handcuffs," making it more difficult to outperform the market or to protect the assets of the Mutual Fund in a downturn.

Hedge Funds, on the other hand, are unregulated and therefore unrestricted. They are allowed to short sell and are able to use many other strategies designed to accelerate performance or reduce volatility.

However, an informal restriction is generally imposed on all Hedge Fund managers by professional investors who understand the different strategies and typically invest in a particular Fund because of the manager's expertise in a particular investment strategy.

These investors require and expect the Hedge Fund to stay within its area of specialization and competence. Hence, one of the defining characteristics of Hedge Funds is that they tend to be specialized, operating within a given niche, specialty or industry that requires a particular expertise.

3. Management Renumeration:

Mutual Funds generally remunerate management based on a percent of assets under management.

Hedge Funds always remunerate managers with performance-related incentive fees as well as a fixed fee.

Investing for absolute returns is more demanding than simply seeking relative returns and requires greater skill, knowledge, and talent.

Not surprisingly, the incentive-based performance fees tend to attract the most talented investment managers to the Hedge Fund industry.

4. Protection Against Declining Markets:

Mutual Funds are not able to effectively protect portfolios against declining markets other than by going into cash or by shorting a limited amount of stock index futures.

Hedge Funds, on the other hand, are often able to protect against declining markets by utilizing various hedging strategies.

The strategies used, of course, vary tremendously depending on the investment style and type of Hedge Fund.

But as a result of these hedging strategies, certain types of Hedge Funds are able to generate positive returns even in declining markets.

5. Future Performance:

The future performance of Mutual Funds is dependent on the direction of the equity markets. It can be compared to putting a cork on the surface of an ocean - the cork will go up and down with the waves.

The future performance of many Hedge Fund strategies tends to be highly predictable and not dependent on the direction of the equity markets.

It can be compared to a submarine traveling in an almost straight line below the surface, not impacted by the effect of the waves!

Hedge Funds

2009-10-26T01:59:00.000-07:00

Hedge Funds are not conventional investment funds and may use some of the following strategies:

A. Hedging by Selling Short:

Selling shares without owning them, hoping to buy them back at a future date at a lower price in the expectation that their price will drop.

B. Using Arbitrage:

Seeking to exploit pricing inefficiencies between related securities.

C. Trading Options or Derivatives:

Contracts whose values are based on the performance of any underlying financial asset, index or other investment.

D. Using Leverage:

Borrowing to try to enhance returns.

E. Investing in Out-of-Favor or Unrecognized and Undervalued Securities

F. Taking Advantage of the Spread Between the Current Market Price and the Ultimate Purchase Price in Situations such as Mergers or Hostile Takeovers

Some Hedge Funds don't actually hedge against risk or may use high-risk strategies without hedging against risk of loss.

For example, a global macro strategy may speculate on changes in countries economic policies that impact interest rates, which impact all financial instruments, while using lots of leverage.

The returns can be high, but so can the losses, as the leveraged directional investments (which are not hedged) tend to make the largest impact on performance.

Most Hedge Funds hedge against risk in one way or another, making consistency and stability of return, rather than magnitude, their key priority.

Event-driven strategies, for example, such as investing in special situations reduce risk by being uncorrelated to the markets.

Hedge Funds may buy interest-paying bonds or trade claims of companies undergoing reorganization, bankruptcy, or some other corporate restructuring - counting on events specific to a company, rather than more random macro trends, to affect their investment.

Thus, they are generally able to deliver consistent returns with lower risk of loss.

Long/Short equity funds, while dependent on the direction of markets, hedge out some of this market risk through short positions that provide profits in a market downturn to offset losses made by the Long positions.

Market neutral equity funds, which invest equally in Long and Short equity portfolios generally in the same sectors of the market, are not correlated to market movements.

A true Hedge Fund then is an investment vehicle whose key priority is to minimize investment risk in an attempt to deliver profits under all circumstances.

Different Hedge Fund styles are as different from one another as are i.e elephants and crocodiles!

So, too, are global macro funds and convertible bondarbitrage funds and Long/Short equity funds.

Different Hedge Fund strategies vary enormously in terms of their returns, volatility and risk.

Therfore, some hedge funds, which are not correlated to equity markets, are able to deliver consistent returns with extremely low risk of loss, while others may be as, or more volatile, than certain mutual funds.

The Stock Market How it Works

2009-10-26T01:54:00.000-07:00

A stock market may be thought of in terms of two separate functions:

1. The Primary Market Function:

Where companies can raise long-term funds for their operations by issuing shares (and other securities) to investors.

2. The Secondary Market Function:

Where investors can buy and sell those shares at current prices as determined by other investors in the market.

A Place where Companies Can Raise Capital

A Company that wishes to set up a new business or expand its existing business can raise the capital it requires either by borrowing money or by issuing shares to investors.

The investors become shareholders in the Company, meaning they are part owners of the Company and share in its profits and growth.

Companies wishing to have their shares traded must first be listed. To become listed, a Company must be large enough for there to be a market in its shares and it must agree to abide by the listing rules which, amongst other things, require it to keep the market informed of its activities and to regularly reports profits and other financial information.

A Marketplace for Buyers and Sellers

After a Company has listed and issued shares to investors, the shares can then be sold to other investors in the stockmarket.

Private individuals can buy shares directly through an adviser at a stockbroking firm, or they can place their money with a fund manager or financial institution, perhaps one which manages an equity trust or superannuation fund. The fund manager will decide where and how to invest the money.

The buying and selling of shares takes place on the electronic trading system with staff at stockbroking firms entering buying and selling orders on behalf of investors.

The price of the shares is determined by the forces of supply and demand, as private investors and fund managers decide at what price they will buy and sell.

Private investors are very important in the process as they control a large percentage of total funds invested in the sharemarket.

The sharemarket provides an opportunity for investors to contribute to and benefit from the wealth-creating activities of companies and in that way participate in the broader economy.

When you buy goods or services from listed companies, you are contributing to their growth and providing an opportunity for higher profits, which enables them to pay higher dividends to shareholders.

For private investors, wealth is created in the form of dividends and other income and capital gains from selling shares as prices rise.

Companies also benefit because, if there is strong interest in their shares, they will be able to raise additional capital when they need to in the future.

What Is Stock? Shares of Stock

2009-10-26T01:50:00.000-07:00

When you own shares of stock you become part owner of a company. If the company does well, the value of your stock should go up over time. If the company does not do well, the value of your investment will decrease.

Companies issue two types of stock, common and preferred.

Common Stock:

Common stock is the basic form of ownership in a company. People who hold common stock have a claim on the assets of a firm after those of preferred stockholders and bondholders.

Preferred Stock:

Preferred stock is ownership in a company, which has a claim on the assets and earnings of a firm before those of common stockholders but after bondholders. The safety of the principal of preferred stock is greater than that of common stock.

Why does a company issue stock?

Why do investors pay good money for little pieces of paper called stock certificates?

What do investors look for?

To start with, if a company wants to raise capital (money) one of its options is to issue stock. It has other methods, such as issuing bonds or getting a loan from the bank. But stock raises capital without creating debt, without creating a legal obligation to repay those funds.

What do the buyers of the stock -- the new owners of the company -- expect for their investment? The popular answer, the answer many people would give is: they expect to make lots of money, they expect other people to pay them more than they paid themselves.

Well, that doesn't just happen randomly or by chance (well, maybe sometimes it does, who knows?)

The less popular, less simple answer is: shareholders -- the company's owners -- expect their investment to earn more, for the company, than other forms of investment. If that happens, if the return on investment is high, the price tends to increase.

Why?

Who really knows? But it is true that within an industry the Price/Earnings (P/E) ratio tends to stay within a narrow range over any reasonable period of time -- measured in months or a year or so.

So if the earnings go up, the price goes up. And investors look for companies whose earnings are likely to go up.

How much?

There's a number, the accountants call it Shareholder Equity, that in some magical sense represents the amount of money the investors have invested in the company.

I say magical because while it translates to (Assets - Liabilities) there is often a lot of accounting trickery that goes into determining Assets and Liabilities.

But looking at Shareholder Equity, (and dividing that by the number of shares held to get the book value per share) if a company is able to earn, say, 1.50 on a stock whose book value is 10, that's a 15% return.

That's actually a good return these days, much better than you can get in a bank or bond, and so people might be more encouraged to buy, while sellers are anxious to hold on. So the price might be bid up to the point where sellers might be persuaded to sell.

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What Is Stock? Shares of Stock Part 2

2009-10-26T01:49:00.000-07:00

What about dividends?

Dividends are certainly more tangible income than potential earnings increases and stock price increases, so what does it mean when a dividend is non-existent or very low?

And what do people mean when they talk about a stock's yield?

To begin with the easy question first, the yield is the annual dividend divided by the stock price. For example, if a company is paying 1 per year and is trading at 10 per share, the yield is 10%.

A company paying no or low dividends (zero or low yield) is really saying to its investors -- its owners:

"We believe we can earn more, and return more value to shareholders by retaining the earnings, by putting that money to work, than by paying it out and not having it to invest in new plant or goods or salaries."

And having said that, they are expected to earn a good return on not only their previous equity, but on the increased equity represented by retained earnings.

So a company whose book value last year was 10 and who retains its entire 1.50 earnings, increases its book value to 11.50 less certain expenses.

That increased book value - let's say it is now 11 -- means the company must earn at least 1.65 this year just to keep up with its 15% return on equity.

If the company earns 1.80, the owners have indeed made a good investment, and other investors, seeking to get in on a good thing, bid up the price. That's the theory anyway.

In spite of that, many investors still buy or sell based on what some commentator says or on an announcement of a new product or on the hiring (or resignation) of a key officer, or on general sexiness of the company's products!

And that will always happen!

What is the moral of all this?

Look at a company's financials and ...

Do some homework before buying!

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Economic Pornography

2009-10-26T01:41:00.000-07:00

An examination of the majority of the popular financial media turns up little of value and little intelligent content at all.

In fact, part of what the popular financial media puts out could properly be called "economic pornography!"

It's not only bad for your wealth, it has no redeeming value at all! What is the media up to? It would be a mistake to believe that they are on a mission to educate the public!

Rather, their mission is to sell papers, airtime, or magazines. Any educational value that might result is just a simple and happy coincidence.

Anyone who has ever watched television, listened to radio, or browsed the newsstand might reasonably conclude that the media have an indeed very low opinion of the general public's intellect.

Their general credo is:

"No one ever went broke by underestimating the public."

Their working philosophy is:

"Give'em what they want; don't make them think; dumb it up as much as possible, and stick to winning formulas!"

But the media has another problem too: The relentless pressure to come up with new stories every day, and while there is a limited number of good ideas to explore, there is an unlimited demand to fill time or columns.

The media solves this problem by carefully selecting the themes they wish to cover. For instance, Modern Portfolio Theory (MPT) is considered too complicated for the public to follow. Not only is it sort of dull, it has a limited number of things that can be said about it and it lacks a human interest angle.

All in all, it's not a subject likely to sell a lot of airtime or papers. Worse yet for radio or television, it takes a little thought and can't be reduced to twenty-second sound bites. It shouldn't surprise you that the media isn't full of stories about MPT.

On the other hand, because there is a new market closing every business day, there is an unlimited number of people that would just love to be interviewed and give their "expert" opinion.

It doesn't matter whether they are right or wrong, or even have a clue of what's really going on! They just fill time and/or space and give the impression of juicy details and maybe even insider knowledge.

But not just any bland comment will do!

"Who knows why the market went down today? Markets do that every once in a while."

"It's really not important to long-term investors."

"Investors should buy a properly balanced diversified portfolio and forget about it."

How many times do you think that person will be invited back?

Where Is the Excitement?

In many cases the media isn't exactly a repository of virtue. Their mission isn't truth, it's spin!

Their interest is in getting their "client's" story out into the media, with enough media coverage able to validate almost any questionable idea.

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Economic Pornography Part 2

2009-10-26T01:40:00.001-07:00

For a "reasonable" price, they will even tell you that tobacco is great for you and your health!

For a variety of reasons, bad advice is far more profitable than good advice. Take a look at who pays for advertising on television, radio, magazines, and newspapers. You don't really expect the media to savagely maul the hand that feeds them, do you?

One of the earliest and most successful idea is that if you tell a big lie often enough, people will begin to believe it!

The financial media people have taken that interesting concept one brilliant step further. By taking a number of absolutely true facts and mixing them with a little innuendo, they have been able to create big lies!

Financial media is not always fair, objective, or impartial. While the various Commissions complicate the lives of financial media by requiring correct documentation and fair disclosures, financial media has found that it can still convey distorted messages.

On the other hand, you will be hard-pressed to find one outright lie. While each fact has been extensively researched and verified, it is the emphasis and small inflated details that manage to pass on the false image.

Not all reporters are experts in their field! It's perfectly possible to be a financial reporter without ever having taken a course in economics. It's perfectly possible to be successful in the trade without having read a book on the subject in the last twenty years.

Economic theory has evolved rapidly in the last years and many reporters haven't done their homework. Then again, they don't need to; it's too easy to interview people and quote on yesterday's market close.

Of course, the really bright reporters quickly find that financial theory doesn't worth their time. There are lots of really bright reporters who could teach courses in economics. But they are trapped into covering the same old stories the same old way!

That's what the people want, expect, and pay for!

That's not only what sells ...

It's what advertisers want and pay for!

There is a whole industry out there that gets paid very well for filling your head with garbage!

Investors have got to realize that this type of commentary is worth far less than zero!

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On-Line Stock Market Trading

2009-10-26T01:34:00.000-07:00

It's very tempting, and it sounds great - to be able to electronically trade and make money every day trading from home or office!

But the truth about how electronic on-line trading is sold to the public is an ugly story. No one you talk to about this will admit it! No surprise there!

But you can always count on us to shed light on the truth behind the myth, that will prevent you from disaster!

Brokerage firms decided to set up marketing companies that would offer the ability to set up offices and make money by advertising that you can now trade from their offices in your community and they would make a small fee every time you execute a trade.

Most of the people that would operate offices know absolutely nothing about trading and even less about economics.

They would hire a person to teach the aspiring traders how to use the electronic trading system.

The person teaching in most cases never even traded in stocks before in his life, or had no experience trading and probably never even set foot in a real trading department of a brokerage firm.

The result is a disastrous combination of the inexperienced, incompetent managers and teachers instructing inexperienced aspiring traders!

The truth of the matter is that most people are not successful trading in this environment. Not because on-line trading "doesn't work," but because they're not taught how to do it properly!

The people that are operating these offices expected it to be as simple as running a coffee shop.

They had what I call a casino mentality!

They thought that all they had to do was open an office and people would beat down their door to get in.

They didn't realize that if people lost money they would quit trading.

The owners of the offices were not equipped to continually train the traders and offer support and on-going advice to insure the traders success.

See, in the beginning it was very simple.

While watching a screen, as soon as you saw offers fading you would obtain an execution at the offer, then simply sell the stock when it traded up a certain percentage.

That worked like shooting fish in a barrel when there was only about 300 guys trading back in the early days.

Now you have 600,000 or more guys trying to trade that last offer before the stock goes up!

Market makers are also very shrewd cats. They know how to trade against the other traders and take advantage of their weaknesses (which is immediately selling the stock they bought if it doesn't go up).

Now, Really ...

Who Is the Idiot?

Remember, when you buy or sell, somebody is on the other side of the trade ...

Do you really think that you know more than this other person?

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On-Line Trading Part 2

2009-10-26T01:33:00.001-07:00

So how do you make money with electronic on-line trading?

It's still a wildly profitable way to make a living! Offering you complete freedom to be your own boss and work on your own terms.

Though on-line investing isn't for everybody, it can be a powerful tool for investors who are disciplined about research, make carefully reasoned decisions and maintain a balanced portfolio.

If you are new to on-line investing, don't put your entire life savings into an on-line account. Start with a smaller sum, which will be easier to handle and keep track of. Once you feel confident, you can then decide to add more money to your on-line account.

You really have to be extremely careful because "the game" has changed dramatically and only a handful of traders have kept up with the changes.

The Golden Rules of Investing

The U.S. Securities and Exchange Commission released a public statement warning of the potential dangers of undisciplined on-line investing. In it, they outline three "golden rules" for all investors, with which we wholeheartedly agree:

1. Know what You Are Buying:

Do your homework before buying or selling a stock. Look at the fundamentals and understand the company's products and services.

2. Know the Ground Rules:

Today's markets are moving faster than ever. It's imperative to know the rules under which you transact.

3. Understand the Risks:

All stock investments entail risk. Keep in mind that stock prices go up and down, and you can lose money at any time.

Realistic Expectations!

When it comes to investing, it's important to have realistic expectations. Don't be misled into thinking that frequent or day trading will be a source of "easy money."

These strategies can be extremely risky!

If you're new to investing, you'll find a wide variety of high-quality information and investment tools available here on our site to help you learn about the markets and formulate your profitable investing strategy.

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The Investor's Bill of Rights

2009-10-26T01:28:00.001-07:00

When you invest your hard earned money ...

You do have the right to:

Ask for and receive information from a firm about the work history and background of the person handling your account, as well as information about the firm itself.
Receive complete information about the risks, obligations, and costs of any investment before investing.
Receive recommendations consistent with your financial needs and investment objectives if you use a full service brokerage.
Receive a copy of all completed account forms and agreements.
Receive account statements that are accurate and understandable.
Understand the terms and conditions of transactions you undertake.
Access your funds in a timely manner and receive information about any restrictions or limitations on access.
Discuss account problems with the manager or compliance department of the firm and receive prompt attention to and fair consideration of your concerns.
Receive complete information about commissions, sales charges, maintenance or service charges, transaction or redemption fees, and penalties.
Contact your local securities agency in order to verify the employment and disciplinary history of a securities salesperson and the salesperson's firm; find out if the investment is permitted to be sold; or file a complaint.

Profitable Stock Market Investments

2009-10-26T01:22:00.000-07:00

To build a stock portfolio we start by looking for well-managed companies with good earnings growth that are selling at reasonable valuations!

To find them, we use fundamental factors, which include valuation, momentum and other techniques used in equities research.

We identify the investment objectives, fine-tune the processes to meet that objectives, identify the sources of returns, construct the portfolios, monitor and adjust them as necessary.

Increasing the Odds of Success!

Nothing guarantees success when investing in the stock markets, but there are tools and resources that can increase the probability of superior investment performance, and we do try to employ them all.

We promote ideas and in-depth research from around the world. To make sure we have access to every aspect of every company, we have also formed extensive alliances with international experts to provide market analysis and perspective.

Risk management is a science and when it comes to it, we believe that ongoing analysis and quality control are the keys to improved performance and to protecting our clients from unnecessary risks.

We set parameters and monitor risk across all strategies, review sector weightings and individual stocks on a daily basis, track where we are relative to specific benchmarks and our competition, and adjust our holdings as appropriate to the ever-changing world market environment.

Our global network is the foundation of our research effort, while the scope of our operations provides us with superior management access and trade execution virtually anywhere in the world.

Furthermore, we work with top investment managers and we support them with exceptional technology and information resources that lead to the most profitable and productive actions.

What about the "Long-Term?"

While reinforcing the need for patience, the markets performance during the past years has put many investors who claim to be long-term investors to the real acid test!

Our portfolios are designed to meet long-term objectives, and long-term does not mean the next month or the next year! They could very easily mean five years down the line when i.e. your first child goes to college or 30 years from now when it is time for your retirement.

Portfolios are put together to weather and even benefit from market cycles, not to be torpedoed in the middle of them.

That is why investors must always ask themselves why they want to invest in equities and what they really mean by "long term!"

In our opinion, if the investors don't have their targets clearly focused they should not be in the markets at all. They would be better off putting their money into bonds and money market funds, or better yet... under their pillows!

And if they are in for the long-term, investors should do everything they can to ignore the pains of a down market. The time will come when the fall of i.e. Enron and/or WorldCom will be just a tiny footnote rather than a major front-page headline.

Everlasting Opportunities?

During the past years we have witnessed a brutal and confusing period for the stock market, with twists and turns that kept ignoring all historical trends.

Normally, one might take heart at the fact that, since the Depression at least, declines such as the 2001 - 2003 that we have lately seen have come near the end of bear markets and been followed by rapid advances and recently the credit crisis.

But again, we seem to be in a period where historical patterns - for the short term at least - are not a certain guide anymore.

Basic rules and common sense were forgotten in the "gold rush" of the late 90s, but have been painfully reinforced and reactivated by the 2001 - 2003 stock market's declining performance!

There is always risk involved in equity investment. The last bull market, when every stock from i.e. Internet start-ups to blue chip companies steadily kept on rising, was an anomaly, and it is not due for a fast return. The sooner we accept that the better will be for everybody!

And as difficult as it may be to believe it, during this severe bear market, there are always certain excellent buying opportunities to be found.

In fact we do believe that sometime during the next years we will look back to this point in time and see it as having been the ideal one for buying stocks ...

The right stocks, that is!

Beating the market takes a little luck, a huge effort and constant hard work; and as we have shown, that we are well equipped to the challenges of capitalizing on opportunities!

Stock Analysis, Research and Recommendations

2009-10-26T01:16:00.000-07:00

Stock research analysts study publicly traded companies and make buy and sell recommendations on the securities of those companies. In this way they can exert considerable influence in today's stock marketplaces.

Stock analysts' recommendations and reports can influence the price of a company's stock - especially when the recommendations are widely disseminated through public appearances.

The mere mention of a company by a "popular stock analyst" can temporarily cause its stock to rise or fall - even when nothing about the company"s prospects or fundamentals recently has changed!

While analysts provide an important source of information in today's markets, investors should try to understand the potential conflicts of interest analysts might face.

For example, some analysts work for firms that underwrite or own the securities of the companies the analysts cover. Analysts themselves sometimes own stocks in the companies they cover!

The fact that a stock analyst - or the analyst's firm - may own stocks they analyze does not mean that their recommendations are flawed or unwise.

But it's a fact you should know and consider in assessing whether the recommendation is wise for you.

As a general matter, investors should not rely solely on an analyst's recommendation when deciding whether to buy, hold, or sell a stock.

We strongly suggest that a little more digging on your part, beyond what brokerage companies are recommending, will always be to your benefit!

It's up to you to educate yourself to make sure that any investments you choose match your goals and tolerance for risk.

Remember that stock analysts generally do not function as your financial adviser when they make recommendations - they're not providing individually tailored investment advice, and they're not taking your personal circumstances into consideration!

Above all, always remember that even the soundest recommendation from the most trust-worthy analyst may not be a good choice for you!

That's one major reason why you must never rely solely on an analyst's recommendation when buying or selling a stock.

Before you act, ask yourself whether the decision fits with your goals, your time horizon, and your tolerance for risk.

Know what you're buying, or selling and why!

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Analysis and Recommendations! Part 2

2009-10-26T01:15:00.001-07:00

Hoping to restore investor trust, many regulatory bodies are lately adopting new rules requiring stock analysts to disclose in written reports and in interviews any financial conflicts of interest they have with the companies they cover.

The rules are aimed at bolstering shareholder confidence after financial disasters that called into question the accuracy of company audits and stock analysts reports.

Amongst others, the disasters include the collapse of the dot-com bubbles and the scandals surrounding bankrupt energy traders.

Some analysts misled investors by issuing bullish research reports on poorly performing companies to generate or keep lucrative investment-banking business from those firms.

Many interested groups say that the new rules are better than nothing. But they also say that those rules are years overdue and surely fall short of what is really needed.

These rules take an important first step but do not go nearly far enough to limit the ties between analysts and their firms investment-banking departments.

They also may not be sufficient to resolve some deeply rooted conflicts of interest in the field.

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Investments, Money and Ethics

2009-10-26T01:12:00.000-07:00

"The higher the buildings, the lower the morals."
Noel Coward (1899 - 1973)

Money is a symbol of energy and sometimes power. As such it has no real intrinsic value. It is neither good nor bad, positive nor negative ...

It is 100% impartial!

In life we are always on a constant quest and we have built a complexity of myths around investments and money. We have given it characteristics as if it were a savior.

How many times have we said, "If only I had enough money!" In this way we end up both desiring and fearing money.

The basis for understanding and being comfortable with money is just one more aspect of our self-awareness.

We know that one of the factors by which we judge ourselves and others is money -- how much we made, how we made it, how we spent it and etc.

This judgement constitutes part of our market value and speaking of money is sometimes reflecting our value in society.

Although everyone wants more money, the idea of havingwealth is sometimes tainted. On one side of the coin, money is thought to be highly desirable; on the other side, it is considered bad and almost dirty!

Most of the cultural arguments that make prosperity a moral issue are never made out loud. The ideas that we can't or shouldn't be financially prosperous are projected subliminally in the form of myths, ethics or beliefs.

Whether we believe it or not, one of our strongest beliefs is that hard work is a reward by itself. It is also part of our tradition that poverty is a virtue and certain religious teachings from the Bible have even been interpreted as confirming that poverty is somehow holy!

It has been remarked that the best thing we can do for the poor is not to be one of them!

Well, by all means, this is not being unloving!

It is a statement of not accepting poverty as inevitable.

Poverty helps no one!

Investors and My Millionaire!

2009-10-26T01:10:00.001-07:00

My Millionaire didn't get rich from inheritance. He didn't win any grand prize and he didn't either strike it rich on the financial markets.

He got there because he always was, and is, a true investor!

The average millionaire is hard working, often has his own business, and lives frugally so that he can invest for the long run. Don't be turned off by the word "frugal," what you spend your money on doesn't matter as long as you're saving enough!

The point is, spend money on whatever you desire as long as you put investing as your top priority!

My Millionaire went through life working hard to get rich, not working to spend! Take a Doctor or a businessman who makes a lot of money. He has a lot of expensive cars, a nice house, and nice clothes -- status symbols ...

But really has no wealth!

Everything he buys depreciates, with a possible exception to his home. He isn't rich just because he makes a high salary. In fact, he isn't rich at all, he just works to spend.

But, my Millionaire is rich because he works to get rich!

My millionaire is working ...

Is saving ...

Is investing, and ...

He is getting rich over the long run!

It's a fail-safe system!

Investing and the Age Percentage Formula

2009-10-26T01:06:00.000-07:00

How do you decide how much of your investments to put into stocks and how much to put into other types of investments?

Before deciding how much to invest in each, a littlefinancial planning and self-examination is necessary.

Basically, there are five things you need to consider when trying to decide how much to invest in stocks and what to tuck away in other investments:

1. Your Age

2. The Consequences for Your Retirement Planning

3. Your Personal Comfort Level

4. How Diversification Affects Risk, and

5. Your Overall Financial Goals

You start by placing your age into a formula which tells you what percentage of your long-term investment money should be invested in aggressive growth vehicles such as stocks.

It simply is:

100 - YOUR AGE =

The percent of your investment money that should be in aggressive growth investments.

This formula is straightforward and makes logical sense. When you're young, you have time on your side. If one of your investments goes in the tank, it may be upsetting at first.

However, you have many years before your retirement to rebuild your fortune before you actually need to touch the money. The main risk you have to overcome when you are young is not losing your fortune, but not growing your fortune fast enough.

And this formula doesn't lie!

Clearly, when you grow older, more of your assets should be invested into conservative, income-producing investments such as bonds.

That's because when you're 50 years old you have a lot less time in the job market to rebuild your retirement fortune than when you're say a 25 year old.

This formula generally applies to money earmarked for retirement. Or at least money that you won't touch for 7 years or more.

The Stock Market

2009-10-26T01:04:00.000-07:00

How the Stock Market Works

Lets say you hear a tip that X company is coming out with a brand new product that is supposed to double their business. You think to yourself, "I wish I owned that company!" Well you can!

X company, along with other companies, lets the public buy part of its company. It does this through selling shares. A share or stock is simply a piece of paper that says you own part of a company.

This part is usually extremely small, perhaps thousandths of a percent of the total company, but, hey, it is a beginning!

You decide you want to buy part of X. You count up all of your money and find out that you have Y amount.

Well you are not going to be able to buy the whole company ...

But it is a start!

You've got the money, you know what stock you want to buy, now what? Do you go to the grocery store and ask for a dozen shares of X? Not exactly, but close. You don't go to a grocery store, but rather you call a stockbroker.

A brokerage house is your supermarket of stocks! You call up a stockbroker and tell him that you have the Y amount and want to buy as much of X as you can.

The stockbroker in return tells you the listed price of X and that for your Y amount you can buy 50 shares of the X company. You then give to the stockbroker the money, and you get the shares.

Bingo! You have just bought stock in a company!

Sounds simple enough, right?

Actually it is not if you look at it from the stockbroker's point of view.

When you told the stockbroker you wanted those 50 shares of the X company, he did not magically buy them for you. Rather, he sent a message to the Stock Exchange to buy these shares for you.

Now this message is entered in the process and it buys your the 50 shares.

Then a report is issued back at the brokerage house that bought the shares. The stockbroker keeps a record that you own that stock, rather than sending you the actual paper stock certificates.

If you ever want to sell them, your stockbroker will sell them, deduct his commission, and then give you the money.

Banks

2009-10-26T01:02:00.001-07:00

A bank is a business that provides banking services for profit.

A bank raises funds by attracting deposits, borrowing money in the inter-bank market, or issuing financial instruments in the money market or a capital market. The bank then lends out most of these funds to borrowers.

Traditional banking services include receiving deposits of money, lending money and processing transactions.

Some banks (called Banks of Issue) issue banknotes as legal tender.

Many banks offer ancillary financial services to make additional profit; for example:

Selling insurance products,

Investment products or

Stock broking.

Currently in most jurisdictions the business of banking is regulated and banks require permission to trade. Authorisation to trade is granted by bank regulatory authorities and provide rights to conduct the most fundamental banking services such as accepting deposits and making loans.

Banks have a long history, and have influenced economies and politics for centuries.

Traditionally, a bank generates profits from transaction fees on financial services and from the interest it charges for lending. In recent history, with historically low interest rates limiting banks' ability to earn money by lending deposited funds, much of a bank's income is provided by other fees and riskier investments.

Although the type of services offered by a bank depends upon the type of bank and the country, services provided usually include:

Taking deposits from their customers and issuing checking and savings accounts to individuals and businesses.

Extending loans to individuals and businesses.

Cashing checks.

Facilitating money transactions such as wire transfers and cashiers checks.

Issuing credit cards, ATM cards, and debit cards.

Storing valuables, particularly in a safe deposit box.

Banks' activities can be characterised as retail banking, dealing directly with individuals and small businesses, and investment banking, relating to activities on the financial markets.

The Best Investment!

2009-10-26T00:59:00.000-07:00

"I can get no remedy against this consumption of the purse: borrowing only lingers and lingers it out, but the disease is incurable."
Shakespeare, William (1564 - 1616)

How thick is your billfold these days?
Is it full of cash or credit cards?

One of the critical keys to investing is only to use money that is free of other obligations.

The quick way to increase the power of your money is common sense:

Pay for everything in cash and don't incur any debt!

That's easily said if you have a high income. But not everyone has that luxury, and even those of you who do, find it hard to resist the temptation to borrow.

Formulate a debt reduction plan today and follow through on it!

Paying off your credit cards is your best single investment!

Where else can you get a risk free, guaranteed rate of return, of up to 20%?

It is the old story of a penny saved is a penny earned!

In looking at your financial position, until you pay off your existing debt, your investment returns will be offset by the interest you are paying on your debt service.

Credit cards are a great convenience that millions of us use all the time for dozens of reasons. Plastic money is also a great source of financial pain and suffering. People get caught up in the really low minimum payment schedules and the easy ways that they can get cards. And what has happened?

Record numbers of people find themselves in financial troubles!

So what's the answer?

Have only one card! Use it to guarantee hotel rooms, get rental cars and to make purchases when there is a really good sale on something you absolutely want or need. Pay all the balance every time you get a statement.

If you want to reduce the number of your credit cards, then you have a few options:

A. Pay them off as fast as you can!

B. Pay the one with the smallest balance, then take that payment and add it to the next one, and so on until you're done.

C. Pay more than the minimums where possible. It can take years to pay off a balance by paying minimums only.

If you still have a card with a high interest rate, and are carrying a balance, get a new card with a lower rate and transfer the balance.

D. Cut your cards up and throw them away!

Call the credit card companies and tell them you want the accounts canceled!

Investment Philosophy

2009-10-26T00:53:00.000-07:00

People choose to spend their money in many ways. The bulk of most people's income goes for day-to-day living expenses:

A. Food

B. Shelter, and

C. Clothing

But even if you live a no-frills lifestyle, it is important to make some investments for the future. A relatively small sum set aside each year can make an important contribution to your long-term financial security.

The theory behind investing is elementary:

Money not needed now can be invested to produce more money later, which will come in handy when needed.

We all need money, not just for our day-to-day lives, but for bigger plans -- buying a house, a car, a business, etc.

There is one major idea which comprises the philosophy of investing:

The Future Value of Money!

Future value is the sum to which an amount invested today will grow given some appreciation rate.

People invest on the hope or promise that they will receive more money later. Present value is the value in today's terms of a certain amount of money in the future. This is based on some estimated rate-of-return over a long period of time.

When you invest ...

Your money is working for you ...

Rather than the other way around!

Economics

2009-10-26T00:52:00.001-07:00

"Economics is the only field in which two people can share a Nobel Prize for saying opposing things!"

The word "Economics" is based on Greek roots. The two Greek roots of the word "Economics" are oikos -- meaning more or less the household or family estate -- and nomos, which can mean rules, natural laws or laws made by the government, but which in this case primarily means "wise saws" or "rules of thumb."

Thus, the book "Oikonomia," by the ancient Greek author Xenophon, is probably best translated as "rules of thumb for estate management."

By the 1600's, the interdependence of people and nations through markets had grown so great that it was necessary for governments to have carefully thought out policies to deal with the markets. The most common such policy was "mercantilism."

The essence of mercantilism is to try to sell as much as you can to your neighbors, while limiting what they sell to you, so that they have to pay you the difference in gold.

But this policy was criticized by a number of thoughtful scholars. They were engaged in a new specialization: the study of "rules of thumb for the management of the common household."

The father of modern Economics, Adam Smith (1723 - 1790) entitled his famous book:

"An Inquiry Into the Nature and Causes of the Wealth of Nations."

Smith was, in many ways, the founder of modern Economics. He wrote at a time when the industrial revolution was just starting to transform European society.

He observed that, in his own society, economic development could bring about a widespread prosperity, and yet other countries, and even some districts of an advanced country, could lag behind in poverty.

It was never difficult to account for poverty; poverty had been the condition of most people since time immemorial, but what could account for this prosperity?

This was the question Smith put to himself, and in his time it was the central question of Economics.

In his great book Adam Smith took this question as his first subject: what is it that causes production of goods and services to increase with time, so that nations become wealthy rather than poor?

According to Smith, "It is the great multiplication of the productions of all the different arts, ...which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people."

Smith's objective was to learn more about the "multiplication of productions." For him this was the point of Economics.

When the production of goods and services for the market grows bigger, this is what we call "economic growth."

If production grows fast enough, then we will have more production per person. This is called a "rise in the standard of living."

When Adam Smith talked about "the wealth of nations," modern economists would talk about a high and rising standard of living.

Know Yourself!

2009-10-26T00:47:00.000-07:00

"It is not because it is so difficult that we do not try something, it is because we do not try that makes something so difficult."
Seneca (4BC - 65AC)

Because of money or the desire to excel over others, a person's own fears and greed and his ability to curtail these psychologies plays the most crucial role in his success in investing.

It simply is not possible to consistently win on every single investment. Investing comes with the challenges of losing and, worse yet, losing streaks that the investor must sometimes be able to contend with over a long period of time.

On top of this, an investor must also be able to curtail his tendency for over-confidence in a winning streak, as this will put him in a very vulnerable situation to give back what he had just made, and, in many cases, even more - all because of the lack of discipline.

Add to this the challenges that come from an investor's social world outside of the markets, and indeed, individual psychology is one aspect of investing that any participant needs to master in order to preserve capital and be in the position to beat the markets!

Discipline is not an innate quality ...

It needs to be, and CAN be cultivated through constant practice!

Investors and Money Mistakes

2009-10-26T00:43:00.000-07:00

Investors and Money Mistakes

"A person often meets his destiny on the road he took to avoid it."
Jean de La Fontaine (1621-1695)

Here I have summarized six of the most common money mistakes investors tend to make. If any of them strikes home with you ...

Why not resolve that you, too, will "know better" -- and do better!

1. Becoming paralyzed by how much you don't know.

The fact is, you can begin investing effectively with only a few basic principles under your belt!

2. Putting off financial planning until a crisis occurs.

Deep down, you do know that you've been putting off essential planning. Resolve to take action now, before any more time goes by. Believe it or not, peace of mind feels much better than procrastination!

3. Focusing only on the short term.

The amount of time retirees are spending in retirement continues to grow, so the amount of money we'll need to live on continues to increase. This knowledge should encourage us to work even harder on investing for the long term.

4. Investing only in "safe" choices.

A short-term focus tends to steer us toward such choices as savings accounts, CDs, and money market funds, which offer excellent short-term safety but may not keep pace with inflation in the long run.

Investors should also consider including investments such as stocks in their portfolio that may offer excellent growth potential.

5. Refusing to seek assistance because you're sure you can do it yourself.

Missed investment opportunities can cost you megabucks!

6. Leaving your future financial security up to someone else.

To avoid making this biggest mistake of all, resolve to start every new day by reminding yourself:

"If it's to be, it's up to me!"

Financial Mistakes!

2009-10-26T00:35:00.000-07:00

Financial Mistakes!

"Intellectuals solve problems.
Geniuses prevent them!"
Albert Einstein (1879 - 1955)

A few years back, a man lost his entire life savings in less than two months!

The process started one afternoon as this man called for an appointment to see me. Several weeks earlier, he had received a very large amount of money from his late father's will, and had decided it was now the right time for him to do something with that money.

I gave him an appointment on the next day afternoon, but he missed it. When I called to find out why, he told me that a stockbroker had called him and then stopped by his office. He had invested the entire amount of money with this person, a person whom he barely knew.

I was stunned!

How could anyone make such an impulsive decision with such a large amount of money?

After a pause to collect myself, I told him that since my appointment was free, why didn't he come in first to see me and et a second opinion. He replied that he just couldn't wait and that he had to do something fast!

Unfortunately, the stockbroker put all his money into onlyone investment. In less than a month the company he invested his money into, experienced severe financial difficulties. He lost almost all of his late father's money!

Of course he didn't understand investments, but this was every cent he had.

Why would he invest it suddenly with a person who called him out of the blue? It just didn't make any sense!

For weeks afterwards, I wondered how anyone could make such a gigantic investing mistake.

I had seen many investors make a variety of bad judgements, but never one that caused someone to lose such an amount so tragically.

I was so obsessed with his mistake that it made me become extraordinarily aware of money mistakes. Eventually, I noticed patterns in these mistakes.

Many people tended to make a certain type or pattern of mistakes. If allowed to go unchecked, they would tend to make the same type of mistake over and over again.

Since the typical family invests only 5% of their income, it seemed more important to concentrate on spending mistakes rather than investing ones Besides, if you can't avoid spending mistakes, you will not have any money left to make investment mistakes!

Regardless of the number or types of mistakes, the most critical mistake is the very last one ...

The one that comes from the final spending decision itself!

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Financial Mistakes Part 2

2009-10-26T00:28:00.000-07:00

Financial Mistakes Part 2 It is at this moment that all previous life habits come together to affect the spending decision. If the final spending decision is a mistake, it will always result from any of your past subconscious habits. Since most of the people are not consciously aware of their spending mistake patterns, they don't learn from their mistakes. They keep on repeating the same spending mistakes over and over again. Just becoming aware of their spending mistake patterns can help many people control it. In this respect, spending personalities are similar to basic personalities. Just as a talkative person can't quietly listen or a shy person can't be more outgoing when the situation warrants it, people can control their "spending personality" by becoming aware of it and consciously controlling it. As the emotions surrounding any given purchase change, spending personalities can change as well! Let's say that any given person can find buying a new shirt to be a real thrill, but buying a new car can prove to be a troublesome process. In this case, your spending personality might change from Impulsive Buyer (one who buys on a whim) to Passive Buyer (one who procrastinates). Because the emotions are different in each situation, your spending personality will always probably be extremely different as well! Spending based on your deeply felt values, rather than on every impulsive purchase, can save you a great deal of money over the years. Since only an idiot never learns from his own mistakes and it doesn't take a lot of intelligence to learn from your own mistakes, therefore, it doesn't also take true genius to learn from other people's mistakes! Regardless of how much genius it takes, one of the least expensive ways to learn from mistakes ... Is to learn from someone else's! Therefore, my best general mistake avoidance advice would be: Avoid Throwing Good Money After Bad! Go Back to the Previous Page

Understanding and Controlling Your Finances!

2009-10-25T09:03:00.000-07:00

Have you ever wondered what it would be like to be able to have complete control over your finances? If you are like most normal people, you have a job. You go to your job every day. Every week or two weeks or month you get a pay check for some amount. You have taxes: The government, in an effort to make your life easier, lifts something like a third of your pay check without your having to do a thing. You have problems: For example, you get a speeding ticket one day, and then your insurance goes up. Or your car blows a gasket. Or you lose your job! Then you have desires: All humans do, some more than others. You might desire new living room furniture, a new TV or stereo, new clothes... Whatever. You may desire all of it all at once. Occasionally you cannot control yourself and one of your desires is filled. Therefore you have debt! Debt makes up the difference between income and expense. For most people day-to-day debt goes on a credit card, and large items like cars and houses are handled with more formal loans. Debt itself is not bad. The problem arises when debt accumulates for no apparent reason. Problems and desires would push your credit card balance upward each month because there is no other place for the money to come from. Notice what you do not have in the above scenario? There is no mention of a savings program. Nor a retirement plan. There is no particular hope of reaching future financial goals. No safety net! And most importantly, no peace of mind, no sense of control, nocontrol of your life and your finances. Let's face it! Investment planning is not the activity of choice for most individuals. If we had our way, the various pieces of our financial lives would magically fall into place. All of our financial needs would be met effortlessly without having to devote even a minute of time to planning! Unfortunately, real life doesn't work that way! Making sense of your finances requires more time and effort than ever in today's constantly changing economic environment. You are likely to have many different - and sometimes conflicting - financial goals. Deciding how to meet those goals requires careful planning. So, is there a solution to this problem? The answer is "MAYBE" ... But, it does require a big mental shift and if you are willing to make the mental shift the answer is yes! It turns out there is a different way to live life. This way of life involves figuring out what you really want to do, and what is really important to you as an individual, and then working toward those goals rather than proceeding randomly. What you gain in the process is a sense of control and satisfaction, and a sense of achievement, that is difficult to beat.

Stock Markets and Investing Myths

2009-10-25T09:01:00.000-07:00

Stock markets are the most popular markets forspeculation, due to their enormous size, liquidity and their tendency to move in strong trends.

Presumably, these characteristics would enable investors to have tremendous success. However, success sometimes is very limited mainly for the following reasons:

Many investors come with false expectations of the profit potential and lack the discipline required for investing and trading.

Short term trading is not an amateur's game and is usually not the path for quick riches. Because stocks may seem less familiar, it does not mean that the rules of finance and simple logic are suspended.

One cannot hope to make extraordinary gains without taking extraordinary risks. A trading strategy that involves taking a high degree of risk means suffering inconsistent trading performance and often suffering large losses.

Trading in stocks is not easy -- if it was, everyone would already be a millionaire -- and many traders with years of experience still incur periodic losses.

One must realize that investing and stock market trading takes time to master and there are absolutely no short cuts to this process.

Buy Low and Sell High!

2009-10-25T08:55:00.000-07:00

There is an important financial measure called "opportunity cost."

Basically, this means that if you spend money on something you automatically lose the opportunity to spend it or invest it on something else.

Or, as my Father used to say:

"You can't spend the same money more than once!"

Over time, the stock market has outperformed all other types of investments, including bonds, bank deposits, government securities and mutual funds.

The stock market may not always seem rational, but it's usually right in the long haul.

Over the short term, the market moves based on enthusiasm, fear, rumor and news. Over the long term, though, it is mainly earnings and dividends that determine whether a stock's price will go up, down or sideways.

A good stock may go up even when the market is going down, while a stinker can go down even when the market is booming.

Some days stock prices make absolute sense. Other days they seem ridiculously expensive or extremely cheap.

The key to investing is to determine which is which on any given day, and then take advantage of it!

Prices are set by where a company appears to be going, not where it"s been. Investors buy stocks with the expectation that they'll be able to sell them for higher prices at some time in the future.

That means they expect that earnings will likewise grow. And if they don't, the best past performance in the world isn't going to help.

Historically, a well managed and widely diversified portfolio of correctly selected stocks has produced substantial returns with relatively modest risk!

"Buy Low and Sell High" or,

"Buy High and Sell Higher!"

We all heard the above simplistic bits of advice. Unfortunately, as market cycles move up and down, and security prices rise and fall, it's hard to pinpoint the precise time when it's the most advantageous for either transaction.

One way to weather market cycles more successfully is with disciplined, periodic investing, often termed cost averaging. This simply means putting an equal amount of money at regular intervals into one or more securities.

Periodic investing can be an easy way to build up your portfolio! Employ this technique by setting aside a fixed amount of savings every month to invest.

When you invest the same amount every time, you buy more shares when the prices are low and less when the prices rise. The result:

You can potentially lower your average cost per share.

Investments allowed to grow over time can increase in value surprisingly fast. The systematic re-investment of stock dividends can be a painless, automatic way to build up a sizeable "nest egg."

The re-investment method creates a really powerful compounding effect on investments.

This is reflected in the words of Einstein, who once said that, the "Eighth" wonder of the world is compound interest!

Think Carefully!

2009-10-25T08:52:00.000-07:00

"The truth is always the strongest argument!" Sophocles (495 - 406 BC) Take a look in the mirror and remember that any action you take with your finances is for the face right there in front of you. And for a variety of financial and emotional reasons you can not usually act logically and rationally! This person is YOU! And you must take your acknowledged failings into account as well as your strengths. We all have different attitudes to money, just as we have to food, clothes, sport, sex, religion or whatever. You may be a Prudent Prudence or Happy-go-lucky Harry. Most likely you are neither of these extremes, although you may well possess a measure of each of them. For example, you may penny pinch on food but spend a lot on clothes! Accept it! Similarly, you may be a reader of the financial papers or regard the subject as a complete bore. In the latter case you would be foolish to take on a strategy which involves keeping a regular watch on the stockmarket. Try to curb your excesses but at the same time adopt Shakespeare's (1564 - 1616) maxim: "To thine own self be true" (Polonius/Hamlet) and never take any action that goes against your basic temperament. The rock bottom solid safe investment does not exist! You cannot avoid some risk and it is important to always keep this on your mind from the very start. Hopefully the following pages will help you to minimize the risks and develop ways to make your money work for you. You can be sure that if you don't put your money to work someone else will and take the profit for himself. But never think that you can put your money into a so-called risk free investment and forget about it. Some people use high-risk investment options tospeculate, or bet, on the success of an unproven business. But unless you already have investing knowledge, this isn't a game you should ever try to play! If You Want to Play ... Buy Some Toys Instead! On the other hand if you're tempted to speculate, don't try it without either some years of investing experience or having successfully weathered a few ups and downs in the market. Also, be sure you can afford to lose part of your investment if things don't turn out well. Your comfort level with risk will be an important consideration when selecting investments. One concept that can help minimize your risk isdiversifying your investment choices. You should not "put all your eggs in one basket." It is a poor idea to put all your money into one type of investment or to invest only in the stock of one company. You should also avoid investing only in stocks within a single sector of industry. Furthermore, use various investing systems and methods and do not concentrate only in one technique.

The Ways to Make Money Part 2

2009-10-25T08:45:00.001-07:00

The Ways to Make Money
Part 2

As each of us enters different stages of life, our changing family status and objectives, incomes, expenses and living standards shape our investment strategy.

By having a clear idea of what you want your investment to accomplish, you'll be able to put your money to work more productively.

Investing is generally defined as the conversion of risk-free assets into risky ones with prospects of greater return.

Every investment has a certain amount of risk associated with it. You can minimize risk, if you are able to understand the different characteristics of the various investments and build your portfolio accordingly.

Given the existence of risk, why invest at all?

Because historically, the existence of greater risk is commensurate with greater rewards for investors.

You are almost certain to pick a bad investment sometime. The secret then is to cut your loss as soon as possible.

Unfortunately, most people find this very difficult to do. No one likes to think that he has made a mistake and there is a big temptation to hold on and hope for better days.

But there is almost always a time when an investment starts to turn sour that you can get out with only a small loss.

If you hold on you could be on the losing side for many years and then lose even more money in the end.

Having the courage to admit that you were wrong is an essential technique of successful investment as well as in other aspects of life.

A Swiss banker put it rather well:

"If you are losing a tug-of-war with a lion, give him the rope before he gets your arm ...
You can always buy a new rope!"
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The Ways to Make Money

2009-10-25T08:43:00.000-07:00

"If only God would give me some clear sign! Like making a large deposit in my name at a Swiss bank."
Woody Allen (1935 - )

Most people don't spend much time wondering whatmoney is. Their only major concern is how much they have, and how to get more!

What Is Money?

It is a medium of exchange.

What Does it Do?

It ensures the success of exchange by being the one item on offer that is ALWAYS acceptable.

Why Is it Necessary?

Because human beings must exchange to live together in peace, and to prosper!

That IS ALL!

On the other hand, without money, the production and exchange of anything but the most rudimentary goods and services is impossible. It is not difficult, or time consuming, or inefficient, it is IMPOSSIBLE!

Animals don't exchange (or trade) amongst one another. They are self-sufficient, or they take from each other, or they exercise the prerogative of superior strength and/or cunning.

There are some human beings who get along in a very similar fashion, but the overwhelming majority recognise the benefits of voluntary exchange.

Strictly speaking, the use of the word "voluntary" in this context is redundant. The phrase "your money or your life" is not the precursor to an exchange, whether the person uttering it brandishes a gun or a government identity card!

The first rule of any voluntary exchange is simplicity itself. If two people are willing to exchange, each must view the results of the exchange as being beneficial. If either of them is not of that view, the exchange will not take place.

The ways to make money in this world are really very simple:

Marry Someone Who Is Already Rich
Have a Rich Person Die and Will You their Money
Strike Oil
Discover Gold
Win the Lottery
Rob a Bank
Work for it, or ...
Have it Work for You Through Investments!

In investing, you don't have to be an expert to take advantage of real opportunities!

But, in order to invest with confidence, profitable success and consistency and be able to take advantage of opportunities, first you should assure, that all your essential financial needs and responsibilities are met.

Then, start with:

1. Setting aside sufficient liquid funds for cases of emergency.

2. Making sure you are completely and adequately insured.

3. Building a reasonable retirement plan.

4. Getting out of debt -- and staying out!

5. Determining your time frame, and

6. Start investing with the aim of becoming financially independent!

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